Portfolio Rebalance

 Scott Kays, CFP®, CFA

March 23, 2020

You may have noticed an unusually large number of trade confirmations from Schwab lately and be wondering what trades are being made in your accounts and why.

When a client invests with Kays Financial, we establish upfront a recommended asset allocation, i.e. percentage of assets allocated to various assets and categories, such as equities, fixed income, etc. When assets get significantly out of alignment with their recommended allocation, we believe it is a prudent practice to rebalance the portfolio, i.e. sell assets that are above their recommended allocation and use those proceeds to buy assets that are below their recommended allocation. This helps maintain a consistency in clients’ risk profiles, and it enforces the discipline of “buying low and selling high.”

The recent downturn in stock prices has created such an opportunity, so we are rebalancing clients’ portfolios as a result. Most trades are reducing an overweight to bond funds and allocating those assets to underweighted stock funds.

Some may question why we would do this now since it is not certain that the market has bottomed. That is precisely why we are rebalancing—because we do not know where the bottom is! We do not believe in market timing, i.e. trying to pick market tops and bottoms and trading accordingly. Experience indicates that market timing is impossible and usually results in lower returns for investors. We believe a disciplined approach to investing that takes advantage of low prices is a better way to go, and experience has demonstrated the added value of rebalancing once the market turns. Rebalancing is one of those prudent disciplines.

Feel free to reach out to your advisor if you have any questions or want to discuss your portfolio. We continue to diligently monitor the situation on your behalf, and we are prepared to take action as we deem appropriate.

Thank you again for your trust during these tumultuous times. We continue to be here for you!


Scott Kays, CFA, CFP®, is President of Kays Financial Advisory Corporation. He can be reached at (770) 951-9001 or at skays@scottkays.com. 


This report and Mr. Kays’ comments are provided as a general market overview and should not be considered investment or tax advice or predictive of any future market performance. Any security mentioned in this report may not be suitable for all investors.  No investment mentioned in this newsletter constitutes a recommendation to buy, sell or hold a particular investment.  Such recommendations can only be made on an individual basis after an assessment of an individual investor’s risk tolerance and personal circumstances.  Past performance of any investment mentioned is not a guarantee of future performance.  Statements regarding the investment concerns and merits of any investment and fair market value computations are strictly the opinion of Kays Financial Advisory Corporation.  Employees of KFAC and KFAC clients may have positions and effect transactions in the securities of the issuers mentioned here in.