Mental Models discussed in this podcast:

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Show Outline

Key Rebalancing Principles I use in my portfolio

• Occam’s Razor – Keep it Simple
• Rank every position in your portfolio
• Price Matters
• Default to Inactivity – Don’t make your portfolio worse by taking action

Summary:

Rebalancing a portfolio should be based on four key principles: Occam’s Razor, rank every position in your portfolio, price matters, and default to inactivity. Too often rebalancing makes a portfolio worse by taking action.

Investors should be wary of using set rebalancing rules based on time or set portfolio allocation percentages. Anytime you rebalance your portfolio while ignoring price and valuation, you may be making a mistake.

Check out this episode!