I wouldn't think "in the market" meant only in stocks. When the stock market falls, other markets (like bond markets) tend to rise, which makes the bonds look like a poorer value and stocks look like a better value, therefore you would re-balance your exposure by selling some bonds and investing in the stocks
That's not always the case, just making the point that rebalancing a portfolio is not necessarily the same thing as trying to time a particular market.
Rebalancing the portfolio to other asset classes smells a lot like timing the market. The question still remains: When would you move to other asset classes?
You could see cash as a specific kind of market as well with your definition. I'm sure there were time periods when holding cash was your best option.
> Rebalancing the portfolio to other asset classes smells a lot like timing the market.
Rebalancing is not timing the market, unless you're changing your ratios.
Let's say I want 80% equities and 20% cash. The market bombs, and now I have 50% equities and 50% cash. If I thought all the information was already priced into the market, then reallocating to get back to 80/20 makes sense. Not rebalancing would be more like timing the market, because I would be assuming that the current value doesn't represent some "true value" of the market.
> The question still remains: When would you move to other asset classes?
Somewhat regularly, but not constantly because that takes time and has transaction costs. The specific time doesn't matter.
> I'm sure there were time periods when holding cash was your best option.
Definitely, it's just very very hard to identify which periods they are until after they've happened.
No it's not. Currencies move against one another all the time. Your yield is only zero against the same currency, but it doesn't mean your yield is zero in terms of actual global buying power.
