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  1. 1. Ross Naylor +48 (22) 389 65 70 (w) +48 512 275 706 (m) ul. Królewska 27 lok 411 Warszawa 00-060 Poland. Lock In You r Gains Rebalancing your portfolio is a technique that will save your neck...and possibly your heart!Portfolio rebalancing is one of the most misunderstood Words from the wiseconcepts for individual investors. The very idea of sellingsome of an asset that has performed well and reinvesting "You dont buy gold as a speculation, you buy gold tothe proceeds in an asset that has performed poorly just be wealthy and immuneseems wrong. from the stupidity of greedy politicians"However, it should be one of the most widely followedrules for every single individual investor. - Richard Russell (Author of the Dow Theory Letters).Institutional investors rebalance religiously and wouldntdream of not doing so. This could be one of the reasonswhy they routinely outperform individuals year after year .Rebalancing is simply the process of returning theweightings of ones portfolio of assets to the originalbenchmark. For example, if your portfolios proportion ofstock has grown and become too large for your intendedasset weightings and risk tolerance, you might rebalance Did you know?
  2. 2. by selling some stock and putting it into cash or bonds. According to economists, Carmen Reinhardt and KennethMaking these adjustments can make all the difference Rogoff, Greece was in default onbetween complete financial success and dismal failure. its sovereign debt for 90 of the years between 1826 and 1964[The rest of the article can be found here] (i.e. 2 out of every 3). In light of this, their currentFood for Thought difficulties are far from surprising.This article is a month old, I missed it when it originallycame out, however it still does a great job of highlightinga relatively under-discussed factor that could have ahuge impact on the price of gold. That is the growingdemand from China. You can read it here.Another piece on gold. This time a video. The guy is a bitlong winded, if you can cope with me you should be ok, What do...and his conclusion sounds a bit far fetched. Gold atUSD5,000 per ounc e!! This morning it was a few dollars these governments have insouth of USD1,400. Heres the thing though. His rational common - China, India, Russia,for getting there is entirely plausible. Food for thought Mauritius, Thailand, Bangladeshindeed. and Sri Lanka? Answer - They all bought gold inHere are some thoughts from one of my favorite 2010.emerging markets commentators, Dr Mark Mobius. In thislatest piece, he discusses rebalancing the world This level of state buying of goldeconomy. is only going to increase as governments (especially cashFinally, here is a great source of facts to pull out when rich emerging markets) look toconversation around the Christmas dinner table wains. diversify beyond simply holding US Dollars and a few Euros.Thats all for this week Disclaimerand for this year for that matter. The views expressed here are my own. They are notSincere thanks to all of you who have been readers o ver necessarily shared by AESthe past 6 months. If you have any thoughts on how I can International. They are subject tomake this ezine more valuable for you in the year ahead, change at any time based onplease let me know. market and other conditions. This is not an offer or solicitationThe next issue will on the 4th of January and will include for the purchase or sale of anya list of useful New Year financial planning actions. security and should not be construed as such. ReferencesFinally, I am aware that this issue has a strong empha sis to specific securities are for
  3. 3. on gold. Put it down to the approaching festivities and the illustrative or informationalfact that obtaining investment exposure to myrhh and purposes only and are notfrankincense is still pretty difficult. intended to be, and should not be interpreted as, recommendations to purchase orWishing you and your family a very happy Christmas and sell such securities.all the best for 2011.Ross. Call me: +48 (22) 389 65 70 (w) +48 512 275 706 (m) To disallow Ross Naylor from sending you email with this service, click here.