Nominal

I think one of the reasons I enjoy financial management is that I can relate to it in my work-life. As a sound person you try to balance everything that you hear so that they are just the right level for listening. This is also true in asset allocation. Re-balancing is a lot like setting everything to nominal or equalizing. When a particular asset does really well. Small caps, for instance have been doing quite well over the past few years. When I re-balance I take the profit and reinvest it in my portfolio in a "cash" equivalent account. After I have culled the winners I decide who, what, and if I should buy into other sectors.

I regret not taking profit more than I regret being low in a certain asset class. Example? Europe, my asset allocation lists 2% but I have 0% currently. I will stick with cash for that 2% until I see some Euro zone cooperation. I used to have 4% in Europe but I moved 2% to Scandinavia and 2% to "cash". I don't think I will put more than 2% in Europe ever again but who knows.


I'm sorry I am on such a re-balance kick but it's probably the most important part of being your own financial manager. After the last month I sure am glad I rebalanced in May!