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← Rebalancing as Behavioural Discipline
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Question
Why does disciplined rebalancing produce a "buy low, sell high" outcome without requiring market timing skill?
1
Rebalancing is timed to occur only at confirmed market bottoms and tops.
2
Rebalancing algorithms use historical price data to predict future market moves.
3
Maintaining a fixed target allocation automatically triggers buying of fallen assets and selling of risen ones, as a mechanical consequence of restoring weights.
4
Investors who rebalance are selected for above-average analytical ability.
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