And the relative values of those stocks will shift requiring rebalancing. You might be able to do that with new dollars for a while but hopefully, eventually, the swings are much more than new dollars and then what? Pay capital gains tax on sales to rebalance? Convince yourself the new random allocation is fine?

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yorwba 2 hours ago | parent [-]

I thought the point of index funds weighting by market cap is that they don't require rebalancing, because the weight of stocks in the index exactly tracks price movements. You just keep holding the exact same number of shares, and more valuable stocks automatically take up more of your portfolio.

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baobabKoodaa an hour ago | parent [-]

Yes, but parent poster was not talking about an index fund. Read grandparent post again.

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yorwba 39 minutes ago | parent [-]

If you pick stocks with the correct weight to track the index, you're effectively running an index fund. And so you don't have to rebalance to keep tracking the index.

	▲	pid-1 4 minutes ago \| parent \| next [-]
		If you never rebalance, you're never adding new stocks to the index, nor removing stocks that do not belong to it anymore.
	▲	jimmydorry 19 minutes ago \| parent \| prev \| next [-]
		Indexes rebalance frequently. The "correct weight" today, won't be the correct weight in a year.
	▲	UncleDiaz12 12 minutes ago \| parent \| prev [-]
		What are you talking about? Those index fund are constantly rebalancing. This is why you buy an index fund, so you don’t have to constantly rebalance your portfolio.