"Recent events mean smaller investors have the opportunity to rebalance their portfolios."
Sounds good so far.
"Helped by the continuing weakness in the Australian dollar, overseas share holdings, especially in the US market, have outperformed Australian shares and also increased in Australian dollar terms by US dollar currency appreciation."
Ok, so time to take some profits and rebalance into the Australian stock market, right?
"While predicting future currency movements is difficult,"
Yep. Which is why we don't. We leave it to the institutions, who pay for active management.
"the continuing strength of the blah blah blah etc. This is why during the past year, unlike many smaller investors, larger institutions have been reducing their Australian share weightings and increasing their overseas weightings."
So... the market has already moved, the ASX has been sold off by institutional investors in exchange for international stocks?
"smaller investors still have the opportunity to rebalance their portfolios if they wish to reduce their overall risk profile. For many, the changes to be considered include reducing their gearing levels and/or increasing their exposure to overseas assets not necessarily shares."
Hang on. You're suggesting that instead of taking some of the profits from our international holdings and rebalancing into the ASX, we instead rebalance by selling down our ASX holding (at the lowest price it has been in forever), and buy international (at the highest it has been since 2008)? Just like the institutional investors have already done?
I don't know about everyone else but if I were doing a periodic rebalance then all signs at the moment are pointing to lower international exposure, higher ASX exposure. Include gold and bonds into the mix and I should be selling off these too in order to buy more of the ASX.