Mr. Buffet moves some money out of stocks when he feels the market is overpriced, and then puts the money back in when there is a downward correction.
Should this re-balancing be something a middle-aged, middle income household should do periodically (no more than once or twice a year) with their mutual fund account(s)?
SAVAGE SAYS:Absolutely. This is not “trading” or “timing” the market. It is important to “re-balance” your investments (between aggressive and conservative, or in different market sectors) when fate has rewarded you with big gains in one area, putting your original plan out-of-balance. That takes discipline — and inevitably means you will be selling in some sectors when they are rising. Typically, that is a rewarding strategy in hindsight, and a tough discipline in real time!