The Full Motley -- 3Q, 2016

It has been an active quarter since my last reallocation with the domestic stock markets setting all-time highs amid global jitters, which in the past couple weeks have subsided and seemingly reversed. In my last quarterly update, I compared a portfolio to a collective unit of investments working toward the same goal as opposed to the way people often view them, which is as a group of investments trying to outperform the rest of the group.

To my surprise, this reallocation shifted about 1.5% of my balance (most of the time, it is under 1% and typically way less), pulling from Vanguard Total Bond Market Index, Vanguard Explorer Fund and Vanguard PRIMECAP Fund, as listed from the most highest amount remove to the least (although, all three were almost the same amount). Those assets mostly were directed into Vanguard International Stock Index Fund, and the remainder split between Vanguard High-Yield Corporate Fund and Vanguard Total Stock Market Index Fund.

The fact that bonds performed so well in the past quarter caught me by surprise. I had known that small-caps were on a rise because I own a triple-leveraged small cap ETF in an unrelated brokerage account, which has had phenomenal performance in the past couple months. I was further surprised to see my actively managed large-cap fund outperform my total market index fund. While the index fund had gained assets, it lost pace to the higher performers.

The best part of this reallocation was that I moved a large portion into my international index fund on August 10, 2016, which is the date I have set for my reallocations, and in the following days, that sector has performed relatively strong against domestic stocks. It was not market timing in the sense that the shift was anticipated, but I unwittingly found the best moment to reallocate based on the disciple of rebalancing quarterly.