Portfolio Re-Balancing – Doing It Proactively

1176019_balancingIt is that time of the year when many of us reflect back on the year and start thinking about how we would re-balance our portfolios. We always read about re-balancing our portfolio on various blogs or investment wisdom. Almost all of these sources show us that we should have diversified asset allocation. Now, when it comes to actually doing re balancing, that’s where, I find such resources fall short of a methodology. If I am reading any literature from investment advisory houses or brokerage firms, then I find a fixed template, which ironically remains same for everybody (albeit with some minor tweaks). I have asked few certified financial planners or advisers and almost everybody just repeats the same tape of diversification but misses on how it should be done. There is a school of thought that says sell good ones that have increased value, and buy ones that have reduced in value. Now, why should I sell something when it is consistently giving me returns (and I expect it to continue), or why should I buy something that has reduced in value. The reduced value should be an indication that something is not working, right?

In my view, the process of re-balancing is an ongoing effort. It should be always be part of investor’s ongoing buy and sell decision making process. Depending upon your investment goals and risk profile, individuals should have a set of predetermined criteria which should guide them in making buy/sell decision. This way they are proactively managing their asset allocation. continue reading rest of the article….

Risk Analysis of Portfolio – 2009 3Q

growthLast week, I presented an update on the monthly progress of my dividend portfolio. In this post, I am discussing the quarterly risk analysis. My objective here to make sure I am continuing to following my risk management process.


  1. Maintain pre-determined asset class allocation;
  2. Maintain pre-determined diversification (any sector should not exceed 10%); and
  3. Dividends from a single stock should not exceed 5% of total dividends.

My dividend portfolio holdings can be referenced in My Portfolio menu at top of this page.


Maintaining Asset Allocation

Chart 1 shows the asset class allocation along with my maximum target limits. In general, I am continuing to meet (or much closer) to my pre-defined target levels. During 3Q09, I did not make any contribution to the emerging markets index funds such as VWO and EPI. This was because I believe they rose too quickly to my comfort level. I am still tad lower than my maximum limit for emerging markets.

continue reading rest of the article….

David Swensen Interview – Reiterates Diversified Asset Allocation

Over last weekend, I came across few video clips of David Swensen over at YouTube. It appears to be an interview with some business magazine. I believe any long term investor cannot skip this writing and thoughts about asset allocation, diversification, and alternative asset class. Furthermore, how can one miss his dislike of mutual fund industry and the joker at Mad Money. Mr. Swensen calls mutual funds industry as a marketing industry. After Warren Buffett, its David Swesen whom I admire the most. Both of them have one strikingly similar advice for individual investors, and that is, invest in index funds. At the same time, the significant difference between the two is that Swensen’s thoughts appear to be more pragmatic (on relative basis) for individual investors while Buffett’s skill still continues to remain more of an art.

Dividend Tree Potpourri – August 30, 2009

During the week I participated in blog carnivals and continue to read articles from fellow bloggers. I am listing some of the articles that I enjoyed reading.

Economy, Finance, Investing.…..

My Article in Blogosphere


These are some diverse set of articles from fellow bloggers and business magazines. I hope you enjoy reading all or some of these interesting posts.

Dividend Tree Potpourri – August 22, 2009

During the week I participated in blog carnivals and continue to read articles from fellow bloggers. I am listing some of the articles that I enjoyed reading.

Economy, Finance, Investing.…..

My Article in Blogosphere


These are some diverse set of articles from fellow bloggers and business magazines. I hope you enjoy reading all or some of these interesting posts.

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