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Portfolio Rebalancing Strategies (2 replies)

Brodie Hinkle
2 years ago
Brodie Hinkle 2 years ago

Hey Tobias,

I was wondering if you have experimented with backtests to figure out the optimal way to rebalance a portfolio? I am debating between rebalancing all 20 positions once a year, or if I should rebalance 5 positions quarterly on their annual holding period date? Please let me know what you would suggest. Also, do you find returns in the Micro/Small Cap screener or All Investible screener to offer better long-term returns? Thank you for all you do!

Brad Pappas
2 years ago
Brad Pappas 2 years ago

For what its worth we've been dealing with the same situation and find success in balancing once a month.

Tobias Carlisle
2 years ago
Tobias Carlisle 2 years ago

It depends on how much time you want to dedicate to it. Annually is enough. Quarterly takes more effort. This is the best guide: https://acquirersmultiple.com/2015/05/four-steps-to-implementing-a-quantitative-value-investment-strategy/

The two screeners are comparable. Which you use depends on how much time you're prepared to devote to trading in. The smaller stocks can be illiquid and difficult to trade.