Rick Ferri and Three Fund Portfolio - Rebalancing?

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hotajax
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Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by hotajax »

Does Rick recommend rebalance, or is it truly a lazy portfolio and you, the customer, are really hands off?
I cannot find any reference to rebalancing or not rebalancing "lazy" portfolios.
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retired@50
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by retired@50 »

hotajax wrote: Thu Mar 16, 2023 2:51 pm Does Rick recommend rebalance, or is it truly a lazy portfolio and you, the customer, are really hands off?
I cannot find any reference to rebalancing or not rebalancing "lazy" portfolios.
Rick's core 4 portfolio is mentioned in the lazy portfolio wiki page.
Rick stresses that the exact allocation percentages aren't important, to the nearest 5% is fine
https://www.bogleheads.org/wiki/Lazy_portfolios

So, it sounds to me like within 5% of your initial target of stock/international stock/bonds would be suitable.

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Arboecars
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by Arboecars »

Reasonable minds will certainly differ about the direction of the market.

For perspective, you may wish to watch the highly recommended PBS program called, PBS Frontline: Age of Easy Money (Full Documentary)about the current financial situation, to gain some perspective on the economy.

It is sober, free, informative, and non-political.

https://www.youtube.com/watch?v=EpMLAQbSYAw
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by retired@50 »

Arboecars wrote: Thu Mar 16, 2023 11:24 pm Reasonable minds will certainly differ about the direction of the market.
What does this have to do with re-balancing a lazy portfolio?

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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by BitTooAggressive »

Arboecars wrote: Thu Mar 16, 2023 11:24 pm Reasonable minds will certainly differ about the direction of the market.

For perspective, you may wish to watch the highly recommended PBS program called, PBS Frontline: Age of Easy Money (Full Documentary)about the current financial situation, to gain some perspective on the economy.

It is sober, free, informative, and non-political.
https://www.youtube.com/watch?v=EpMLAQbSYAw
Did you post on the correct thread? :D
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by retiredjg »

hotajax wrote: Thu Mar 16, 2023 2:51 pm Does Rick recommend rebalance, or is it truly a lazy portfolio and you, the customer, are really hands off?
I cannot find any reference to rebalancing or not rebalancing "lazy" portfolios.
The term "lazy portfolio" means different things to different people. Whatever one's definition, I don't think "completely hands off" is suggested by many. To my knowledge, Rick Ferri has never suggested such a thing.

If you want to maintain a certain level of risk, rebalancing is required from time to time.

There are some good lazy ways to achieve this. For example, one could use target funds or asset allocation funds (these rebalance themselves0. Or one can rebalance once a year. Even rebalancing within 5% bands takes little effort most of the time.

From the "lazy portfolio" wiki page posted above...."Lazy portfolios are designed to perform well in most market conditions. Most contain a small number of low-cost funds that are easy to rebalance."
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by dbr »

I don't think "lazy" means that you just go away and forget everything for 20 years. That would be a Rip van Winkle portfolio which is not recommended except in the case of bourbon where the 23 yr is recommended.

It doesn't make any sense to use an asset allocation method of managing investments and then not rebalance. How often to rebalance is a different question to which the 5% bands approach is reasonable.

As to practical, it is a big mistake to not stay involved with your accounts to be up to date on access, on changes that might come down from the management, and to verify there is no mistake, hacking, or other untoward event. There are even reports of very rare instances of people's assets escheated as abandoned assets if there is no contact for long enough.
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by hotajax »

A man who knows Bourbon. I like that.

Instead of investing in stock, acquiring a quantity of Rip Van Winkle might be better than stocks. A buy-and-hold approach would do well.
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by 22twain »

Is Rip's bourbon as good as his pappy's? :beer
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by Rick Ferri »

hotajax wrote: Thu Mar 16, 2023 2:51 pm Does Rick recommend rebalance, or is it truly a lazy portfolio and you, the customer, are really hands off?
I cannot find any reference to rebalancing or not rebalancing "lazy" portfolios.
It depends on whether it's a taxable account or non-taxable.

Yes, for non-taxable, usually covered by new contributions or withdrawals. Otherwise, once per year is fine.

Not much for taxable unless you can do it while tax-loss harvesting or using new cash.
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by hotajax »

Thank you.
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by Johm221122 »

Arboecars wrote: Thu Mar 16, 2023 11:24 pm Reasonable minds will certainly differ about the direction of the market.

For perspective, you may wish to watch the highly recommended PBS program called, PBS Frontline: Age of Easy Money (Full Documentary)about the current financial situation, to gain some perspective on the economy.

It is sober, free, informative, and non-political.

https://www.youtube.com/watch?v=EpMLAQbSYAw
You said in another post you don't recommend market timing, so exactly what is your advice here? I'm missing the point because if you're not recommending market timing, what exactly are you recommending?
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by Arboecars »

I do not recommend market timing under current circumstances.
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by Charles Joseph »

In "Unconventional Success: A Fundamental Approach to Personal Investment," David Swensen has a great chapter on rebalancing and the virtues thereof. I'd recommend the book and that chapter in particular if you're interested in learning about rebalancing.

As an aside, John Bogle's "The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market" and Swensen's "Unconventional Success" are two books that changed my investing life, in addition to "The Bogleheads Guide to Investing." Mr. Bogle has varying thoughts on rebalancing as I recall.

Final postscript: I rebalanced yesterday.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by Charles Joseph »

Arboecars wrote: Fri Mar 31, 2023 8:08 pm I do not recommend market timing under current circumstances.
When done properly with risk management as the motivation, it doesn't seem to me that rebalancing has anything to do with market timing.
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by dbr »

Charles Joseph wrote: Sat Apr 01, 2023 8:55 am
Arboecars wrote: Fri Mar 31, 2023 8:08 pm I do not recommend market timing under current circumstances.
When done properly with risk management as the motivation, it doesn't seem to me that rebalancing has anything to do with market timing.
It doesn't. The point of rebalancing is to maintain an asset allocation that has been selected for the expected long term return and the risk that the investor wants as a plan.

The biggest upset from not rebalancing would be the accumulation over time of a greater fraction of assets in the more risky but higher returning asset. The idea is to not start at 60/40 and end up years later at 90/10 with no thought given to whether or not one wants that risk. An alternative plan could be to not rebalance specifically intending exactly the above result.
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by Artsdoctor »

The biggest benefit of rebalancing is to bring your risk level to where you want it. You may or may not have a superior after-tax return. But one of the other significant advantages is to maximize discipline. If you have new money coming in, you know exactly where to put it.

It would be rare to rebalance and incur taxable gains in the process so if you're doing that, step back and take a close look.
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by coffeeblack »

hotajax wrote: Thu Mar 16, 2023 2:51 pm Does Rick recommend rebalance, or is it truly a lazy portfolio and you, the customer, are really hands off?
I cannot find any reference to rebalancing or not rebalancing "lazy" portfolios.
It sounds like what you are looking for is a portfolio you can set and forget. Based on that you would possibly be a good candidate for single all in portfolio such as lifestrategy funds or Ishare funds.
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by dbr »

coffeeblack wrote: Sat Apr 01, 2023 10:17 am
hotajax wrote: Thu Mar 16, 2023 2:51 pm Does Rick recommend rebalance, or is it truly a lazy portfolio and you, the customer, are really hands off?
I cannot find any reference to rebalancing or not rebalancing "lazy" portfolios.
It sounds like what you are looking for is a portfolio you can set and forget. Based on that you would possibly be a good candidate for single all in portfolio such as lifestrategy funds or Ishare funds.
Without a doubt "lazy" or "hands-off" should not include the likelihood that the portfolio will drift to unacceptable levels of risk while the investor dozes in la-la land.

As you suggest, one path to take is to hold funds of funds that keep a target profile, whether it is a constant profile as in a LifeStrategy fund or a glide path profile as in a target retirement fund. There are also specialty blended funds that may suit.
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by lostdog »

Arboecars wrote: Fri Mar 31, 2023 8:08 pm I do not recommend market timing under current circumstances.
Your posts in this thread have nothing to do with re-balancing...
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by Pops1860 »

Please keep responses in this thread relevant to OP's question.

OP has posed a specific question. Critiquing other members comments (re-balancing vs. market timing comments) are off-topic and risk derailing this thread.

Thank you. Moderator Pops1860
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Re: Rick Ferri and Three Fund Portfolio - Rebalancing?

Post by Munir »

I respectfully disagree with the moderator's opinion. Isn't it appropriate to discuss the subject of when it is advisable to revise one's asset allocation no matter what label you may want to put on it? But I will abide with the decision of the moderator and withdraw from this specific conversation.
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