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Household A’s dashboard logs twelve decisions across its scripted year, and five of them propose no trade: wait, hold, or leave it alone. After the first five months of setup, moving the wrapper, the bonds, and the tilt into place, the rule list triggers an actual trade exactly twice in the seven months that follow, and both trades were set on a calendar back in January, not chosen in the moment they ran.
Why a band, and why every June?
The dashboard’s rebalance rule fires on two conditions, not one: the equity share has to drift more than five percentage points from target, and the calendar has to say June. Either alone invites a worse habit. A band with no date lets a real drift sit unfixed for years; a date with no band forces a trade even in a month when nothing moved. Together they turn rebalancing into a rule instead of a feeling.
Vanguard puts the return value of this discipline at up to 14 basis points a year for a 60/40 portfolio, and says plainly that return was never the point: the goal is controlling the risk of a portfolio that quietly drifted into something more aggressive than the household chose. Daryanani’s 2008 study of “opportunistic rebalancing” reaches a similar place from the other direction: bands that trigger a trade only once an asset class has actually drifted far enough capture more of the benefit than a fixed calendar alone, because most months there is nothing worth the trade’s cost. Household A’s dashboard lists the rule every month; the household accepts or defers it, and the record keeps both.
What is the rule waiting for in October?
September’s harvest sells a losing lot and buys a substitute close enough to hold the household’s market exposure but not the same security. The wash-sale rule then disallows the loss if the original position, or anything substantially identical to it, comes back into any account the household controls within 30 days on either side of the sale. October’s entry in the record is not “buy back now that the loss is banked”; it is “wait,” because the window from a September sale runs into mid-October, and repurchasing early would forfeit the loss the harvest was for. The record does not treat this as a problem to fix. It defers the swap-back and closes it out once the window has actually passed.
Why hold a lot that is about to cross the one-year line?
In February the rule flags the lot of employer stock vested in March 2021: it crosses one year in March, and any sale before then is short-term. The one-year line is worth 17 cents per dollar is the reason that matters: a sale before the line costs 17 cents more per dollar of gain than the same sale after it. The household’s answer is to hold the lot until it crosses and to let any diversification sale wait for the long-term rate. By December the newer March 2022 vest is on the same path, and the year-end entry in the record says the same thing about it. A tax line and a diversification goal are two different rules, and in both months they agree on the same answer: not this lot, not yet.