ShmoopTube

Where Monty Python meets your 10th grade teacher.

Search Thousands of Shmoop Videos


IPO Videos 120 videos

Finance: What is a Lock Up Agreement?
3 Views

What's a lock-up agreement? We think it has something to do with a shiv, but let's watch this video, just in case.

Finance: What are Capital Markets?
7 Views

What are Capital Markets? The most often context used for “Capital Markets” is in corporate finance and investment banking, and it refers prima...

Finance: What are Overbought and oversold?
1 Views

What are overbought and oversold? Hit play to find out.

See All

Finance: What does it mean to rebalance a portfolio? 1 Views


Share It!


Description:

What does it mean to rebalance an account, and will we need a yoga mat? Hit play to find out.

Language:
English Language

Transcript

00:00

finance a la shmoop what does it mean to rebalance an account alright people

00:08

here's your account pretty broad-based equity portfolio and pretty pie chart -

00:13

they're nice going there editor's 17% bank and insurance 14%

00:18

telecommunications 9% consumer comestibles 6% drugs legal ones 11%

00:25

chemicals in commodities 8% transport and whoa 35% tech well just five years

00:31

ago Tech was only 15 percent of your portfolio and it performs better than

00:36

double the returns of the rest of the market in that time period so Wow what

00:40

time is it need a high tech watch to answer no its rebalancing time why well

00:47

because you want to just compound at market rates and yes Tech has been

00:52

amazing and wonderful and loving but Tech can get crushed in bad times as

00:57

well and the huge 37% exposure to it is well keeping you up at night and it's

01:03

see it's gotten up 2% there since we started this video it's just too much [girl waking up in bed at night]

01:07

risk attributed to one relatively narrow area of the investing economy even [pie with a risk tag on it]

01:12

though it touches everything well you're thinking about making tech more

01:15

representative of a balanced broad S&P 500 index fund where in that fund it [S&P 500 document]

01:21

represents on only say 11 or 12 percent so you sell some Apple you sell some

01:25

Google you sell some Amazon Facebook Netflix Microsoft and you buy a [company logos]

01:29

smattering of high dividend high yielding defensive stocks like Chevron [military plane flying]

01:33

for Dow Chemical and Bank of America it's kind of defensive in practice [company logos]

01:38

portfolio managers rebalance their portfolios all the time so they

01:42

represent the promise they made to investors when they raise the money in [scale with tech out-weighted by diverse products]

01:46

the first place to be a fully diversified fund taking only market risk

01:51

in the process and if they still need to do any rebalancing beyond that and well [people doing yoga in park]

01:55

then they just enroll in a hot yoga class

Related Videos

GED Social Studies 1.1 Civics and Government
39794 Views

GED Social Studies 1.1 Civics and Government

Fake News
11938 Views

How do you tell fake news from real news?

Finance: What is Bankruptcy?
260 Views

What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...

Finance: What is a Dividend?
1777 Views

What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...

Finance: How Are Risks and Rewards Related?
589 Views

How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...