Finding the Right Balance in Portfolio Management

by: James Picerno

Fear got the upper hand on greed last week, offering a rare change of pace in the five-year-old running of the bulls. Deciding if the turnaround in sentiment foreshadows more of the same, or was just a temporary detour in an otherwise intact bull market, remains to be seen.

Without the benefit of the answer, now seems like a good time for a refresher course on the all-weather strategy that's fitting for market trends driven by bulls and bears alike. Rebalancing is no get-rich-quick scheme, nor can it guarantee triumph in one's voyage through the capital markets. What it does offer is a prudent approach to managing a multi-asset class portfolio with an eye on balancing reward with risk over time.

Finding the right balance between gain and loss in portfolio management is an evolving and always challenging pursuit. But if there's a promised land, the path to that nirvana arguably rolls through the province known as rebalancing. But even assuming as much offers no shortcuts.

There are as many ways to rebalance as there are brokers on Wall Street. In an effort to bring order to what is in theory a black hole of potential is one Gobind Daryanani, a CFP who's researched the subject of rebalancing in search of strategic enlightenment. Your editor interviewed Daryanani in the June issue of Wealth Manager. If you're inclined to share in the finer points of his analysis, read on.