DG said,

"B) That said, the purpose of an AA is to have a portfolio that meets your personal RISK requirements."

The problem with this statement is that perceived "personal RISK requirements" vary from day to day.  Face it, if you are an investor that needs to sell a portion of their portfolio each year for income, and you see 300 point declines in the DOW, your gut instinct is to "re-balance" out of stocks.  BTW, if you read many M* forums, that is exactly what I see some investors doing.  IMO, re-balancing promotes buying high, selling low, during declining markets.

Just as Bogle dislikes ETFs because he believes they tend to promote "excessive trading", I suspect he is not enthusiastic about re-balancing for exactly the same reason; "re-balancing" may promote excessive trading.

Theoretically, re-balancing should add to stocks during market declines.  However, psychologically that is counter-intuitive and as I said, my observation is that re-balancing is used by some investors as an excuse to move away from stocks, at precisely the wrong times. 

BTW, Dividend Investors have unique advantages during market declines over investors who depend mainly on capital gains for income.  First, there is no necessity to sell stocks each year for income and this insulates Dividend Investors somewhat from price anxiety.  Secondly, and more to the point, as dividend paying stocks decline in price, their yield increases, which makes them even more attractive to own and add to a portfolio. 

Anticipating a comment, yes, it is possible for a stock to cut it's dividend.  However, the time honored principle of diversification of assets mitigates this problem even better for dividend investing than it does for price appreciation investing.  Dividend cuts are relatively rare, price declines are common.

Regards,
Russ