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September 04, 2008


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Rebalancing in any portfoilio is necessary especially if it is diversified. Since all funds do not grow or lose the same percentage, rebalancing it the action to take periodically.

This comment has less to do about rebalancing (although I agree that investors should do it early and often). A couple months back I wrote on this website that I thought the market would be heading for another crash in 6-8 weeks. Today, that day arrived. We'll have to wait and look for confirmation tomorrow but I think the odds are very likely that we're headed for another significant breakdown of the markets in the near term.

For long term investors, this is news to rejoice, since they will now be able to buy shares at progressively less expensive prices (i.e., dollar cost averaging). For short and intermediate term bulls, however, this is grim news indeed. If you are a short or intermediate term investor, the best place to be right now is either cash or in short positions.

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