Reevaluate and rebalance

Most investment funds will be a big rebalancing of their portfolios quarterly and a larger one towards the end of the year. I always encourage my friends and clients to do the same. There’s a reason why those who invest for a living rebalance their portfolios on a regular basis, but yet most retail investors do not.

I do a modified approach which I call reevaluate and rebalance. Every quarter, I review where my portfolio sits at the current moment. I create a breakdown of my money and break this all down into different asset classes between private companies, public equities, crypto, and others.

I first measure performance and reevaluate my strategies. It’s important to note that this does NOT mean changing strategies every quarter or every year. It’s largely a check-in to ensure that things are on the right track and I’m sticking to my guns. I will occasionally make tweaks here or there to ensure that things are on the right track. Rarely, I will completely switch out of a strategy as I realize that I’m in the wrong place.

Secondly comes the rebalancing. With appreciation, portfolios become unbalanced at times with more weight going into one asset class. For example, if you’ve held crypto for a couple years, you’re likely going to have an outsized crypto position relative to when you first invested in crypto. I am always looking for outsized positions to determine whether or not I should reallocate some of that asset class into other areas.

Diversification is good. As much as I’d like crypto to continue to go up and power great gains, I also need to ensure that I am not in financial ruin if there is a crypto winter.

I’ll be doing my revaluating and rebalancing in the next couple of days and I’d encourage all to do the same.