Portfolio rebalance.

25 сентября, 2021 от fake Выкл

«Any, even the most complicated, the problem necessarily has a simple, easy to understand, but the wrong decision»

(C) «Laws of Murphy» A. Bloch

If we look at all Russians who have come to the stock market lately, we will see two large groups:

Speculators: scalpers, dale traders and the like people who have come to the market behind rapid money and hoping to do well percent per month.

Long-term investors focusing on a more modest level of income and occupy a more conservative position.

It is clear that the division conditional like any attempt to classify people — after all, the same person can invest 90% of the deposit in OFZ, and 10% desperately speculate futures. But the general idea of separating market participants, I think, is understandable — those who came for fast money, and those who came to «save and increase» honestly earned.

On the first — gambling comrades who dream of getting rich «right here and now» — the article will not go into the article. God is a judge. People adults have the right to play their money and play roulette, and in futures.

And about long-term investors, I would like to talk in what section: I widespread among the long-term investors the view that there is only one right and leading to the victory of the strategy — «bought and kept».

And it is necessary to keep it extremely forever, without looking at anything — and that’s just such behavior characterizes the true investor, which sooner or later gets rich. And any attempts to revise and rebalacent the portfolio is a heresy that is a real investor to the face.

I want to argue in the article with this approach, and at the same time try to understand where this approach is taken and why it is so widespread and popular.

Well, let’s start with

Everything is very simple — life does not stand still. Even the most powerful and prosperous companies go to Olympus.

Look at

Then maybe you would like to «hold» the shares of the once prosperous company


These are all examples of huge companies, once the leaders of the market in their segments.

It turns out that

Because no, even the most prosperous and powerful company is not guaranteed any of the loss of market share. So I am ready to agree that investing in the index — that our American — you, it is quite possible, make a sensible bet — the economy as a whole develops and buying an index, you can bet on what it will develop further.

But the purchase of any particular company is a deliberate need to look after and for what happens inside this company, and what happens in this industry in general.

But what are we only bad about? There is not only threats that can spoil the business you purchased the company. There are also prospects that you may miss while sitting in these promotions. That is, you, as an investor who wants to effectively invest in capital — it would be necessary to look around the parties all the time.

Life is changing rapidly — the Kodak did not notice the digital cameras, and we may not notice that the electricity will soon cost a penny and everyone will receive it from solar panels on the roof of their cottages. And then what should investors invested in electrical generation? Continue to «hold»?

And we are talking only about global changes in the economy. But after all, the company whose share you bought is influenced by many less global factors: the accident at its production, the dismissal of key managers, political risks and much more, which can change the business company beyond recognition.

Sberbank before the arrival of Gref and Sberbank after his arrival — these are two completely different companies.

Alrosa before the flooding of the mine’s mine and after is different volumes of business.

Raspadskaya to explosion in 2010 and after is a different business.

Aeroflot to Pandemic and now are different companies.

If the shareholder does not take into account such large-scale changes — he simply ignores reality.

As possible in the conditions of constantly changing circumstances, do not change its position?

For example, if in the morning in a person will ask «what time?», He will answer — «seven in the morning.» But if he is asked about the same in two hours, his answer will change, he will say — «Now nine.» In my opinion — a person in both cases will give the correct answer. And in the view of the fanatics «bought and kept» — a man is unacceptable windy. Well, in fact, what is it? Why does he change his opinion every two hours? ))

Speaking of long-term investments in the promotion, in my opinion, choosing paper, really, you should not take the one that is not ready to keep the years in principle. Ideally — ready to keep always. With appropriate circumstances.

But if circumstances have changed — then your attitude to the issuer should change.

On my example it looks like this:


Reverse example.

So, why, in my opinion, the fanatical and coachable commitment of the concept «bought and kept» is not a reasonable approach, I explained.

Let’s try to figure out, and why this concept is precisely this popularity in such an uncompromising form.

It seems to me there are two reasons.

First — Easy Ideas

And people do not like to think. It strains, it makes spending nervous and physical energy.

Think — it means constantly questioning the decisions taken by you and previously constructed designs.

That is the first plus — simplicity concept.

The second plus is even better and cooler — once you never need to think and revise your decision — then you never come to the conclusion that your previous solution was erroneous.


Following the strategy «bought and keep» in her absolute version — you are always right!

Fallen stock price? So what? You are a long-term investor.

Low dividends? So what? You’re a long-term investor — probably will someday grow up.

And most importantly — all critics can «Sat the Forest» and say «this is not failed investments — this is a long-term strategy, come in twenty years to look at the results.» Convenient, in trouble))

So the second plus is always right, always in the zone of psychological comfort

And now let’s compare the two of these plus.


The concept of «bought and kept» in its fanatical execution is extremely simple.

Following this concept — you are always right.

By the way. What does this remind me when people who are the following very simple erroneous paths do not see problems and mistakes?

O! For sure, remembered that it reminds:

There is such a scientific phenomenon — the effect of Dunning-Kruger.

It describes something like this: «People who have a low level of qualifications make erroneous conclusions and make erroneous solutions, but they are not able to even realize their mistakes — by virtue of the qualifications. This leads to their overestimated ideas about their abilities. Highly qualified people — on the contrary, tend to underestimate their competence and doubt their capabilities. «

Translated on a simple language — than a person is less disassembled in the question, the more confident in the infallibility of its decision. He simply does not have a large set of alternative solutions and there is no understanding of the possible consequences to which his decision can lead.

So what do we get? The concept of «bought and kept» seduces new apologists with its simplicity. And in addition, it gives his supporters psychological comfort: you are always right, you do not need to put your actions in doubt.

That’s just — in full compliance with the aforementioned effect of Dunning-Kruger — none of the truly professional investors accounted for and does not cost without revising and rebalancing their portfolio. Apparently, they are confidence in the infallibility of their previously taken decisions they have less than that of the middle fanatics concept «bought and kept».




That is, the opinion that you can buy a company «forever» and forget about it in your portfolio — this is a delusion.

At least — you become ineffective and miss the new (best) opportunities, if you do not compare your investments with others.

As a maximum — you risk staying «at the broken trough», if the company, where you invested «forever» will go broke or comes to stagnation.


Of course, very seductive, after having bought stocks, then just sit and receive dividends. But the market is a place where it will still have to work your head constantly, and not just the place on which the patient fan of the concept «bought and kept» sits. That’s why

Well, we, those who have not bought an index — will continue from time to time to rebalance the portfolios, trying to get profitability higher and seek to become