In the news:
Originally published Saturday, February 11, 2012 at 8:02 PM
Coming to terms: Rebalancing, closing tick
Rebalancing means adjusting the percentage of your portfolio represented by various holdings (such as stocks, bonds, etc.) by reallocating your money.
The Motley Fool
Q: What does it mean to rebalance a portfolio?
A: Imagine that three years ago you invested half your nest egg in stocks and half in bonds.
If you want to keep that balance, but your stocks have grown to become 60 percent of your portfolio, you might sell some stock and add to your bond holdings.
Rebalancing means adjusting the percentage of your portfolio represented by various holdings (such as stocks, bonds, etc.) by reallocating your money. Don't overdo it, though.
If your portfolio changes from 50 percent stocks to 51 percent, that's not cause for alarm.
Q: What's the closing tick?
A: It measures the buying vs. selling activity for the very last trades of the day.
To calculate the closing tick, take the number of stocks that ended on an uptick (i.e., their last trade occurred at a price higher than the previous one) and subtract the number that ended on a downtick.
A positive number for the closing tick suggests an overall upbeat day, while a large negative number would indicate a big sell-off in the market.
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