Subject: Re: Barron's ... oops. market not that overpriced
Which study claimed that the optimal time between rebalances is somewhere between 7 years and never.
Which intuitively makes sense...
Starting with $10,000, the B&H grows to $13.5 million, the annual rebalanced grows to $7 million.

Beware what intuitively makes sense : )
That result without rebalancing Berkshire is certainly a great demonstration, but only if you have a time machine and know the big winner in advance.

The whole point of equal weight is that (a) you almost certainly don't know in advance what will outperform, so (b) don't place any outsized bets on anything, which (c) ensures you never have an overallocation to something temporarily overvalued or doomed. Now, we here at the BRK board know in advance what will outperform, but the reasoning has merit for mere mortals elsewhere : )


Though it's not answering the same question, an equal weight portfolio of the S&P 500 members has beat the S&P 500 itself by quite a lot.
For a data set I have handy, 1926-01-02 through 2024-03-01, just under a century, the equal weight beat the S&P 500 and its cap-weighted predecessors by 2.191%/year. There are certainly stretches that cap weight wins, sometimes by a lot when there are some very large caps in fashion, but that is a minority of the time. Usually the very largest caps underperform the "S&P 495".

That uses RSP returns after fees since its inception in 2003, the historical construction of the S&P 500 Equal Weight index from S&P themselves 1990-2003, and a research database prior to that.
For earlier periods I estimated and applied the rebalancing costs using the overlap period that I have both the official series and the research database.

Jim