Wow so many doubts. First, I am a humble software engineer, why would you even ask such difficult questions
On a serious note, some of them can't be answered (clearly) even in pms. Reason is things are more discretionary than they appear on surface.
Lets see:
1,2, 4 - The rebalancing and re-look are more event driven than time driven. If there is an indication of say a big rate hike next time RBI announces its policy decision, there is no point in sitting for it to happen before I do something about it. By the time it happens, situation is already priced in, market has already moved. Re-look and re-balancing which you do then is merely a representation of something which is already there. Next series of movements are mainly buy side (read MFs, retirement schemes) which are supposed to be more conservative in nature coming into the market. They do move the price upwards and in your favour for profit.
Though obviously, risks are - one, event which are unpredictable, say a terrorist attack or two, it doesn't work out your way, RBI doesn't announces the big rate hike?
First, there is no way to predict the former and I certainly don't loose sleep over it.
Secondly, I deal in probabilities - never in absolutes - so while assessing say RBI announcement, I start off with a 50%-50%, with each news item - CPI figures, economist surveys, FOMC decision probabilities go in one direction or the other. When there is enough conviction (there is always a 10% negative chance) I re-balance my portfolio out (though mind you, with each news item the price is already moving away from the ideal point).
Lastly in case things don't work out even with careful planning, there is call needs to be made. Is the current reaction a whipsaw or a genuine response. Depending I might buy a smallish derivative position. There might even be time to look at my methodology at assessing those events (or that I might need an expert help)
3. Short answer is, recent has more weight age - just due to the volatility which is creeping in. Previous data will give a you narrower range to work with which is not true nowadays.
5. Answer to this question always ruffles many feathers. Let me ask you a question do you believe a stock makes a new high because it crossed a resistance or there was a MA cross-over? If you believe a stock will make a new high, does it matter if the BB or MACD hasn't crossed? Many fail to asses if the price did cross a support, why did it even reach the support at all? There must be something driving the price lower. And once, the support line is crossed, many stop orders which eventually become market orders drive the price down more...making support line a self fulfilling prophecy. That is not to say, TA doesn't work at all -- it does with a proper fundamental analysis (btw have you noticed, novice have much easier access to TA than FA tools?)
6,7,8 Sole reason, I prefer broad market cause I cant really be bothered about each companies reports, market studies, upcoming project etc. Just too much hassle and too many to handle. I do invest in pharma stocks but then those are more long term. Money added to them is something which I am prepared to loose (something like the 30-40% loss you said in your first post). It does go against hedging what I said earlier but then if you look at a long term charts -- pharma has given consistent returns in comparison to weather based stocks like IT, banks, insurance, telecom etc. So there is a conviction based investment.
9. I do sometimes. Specially when assessing situation for which I am unclear on the "time factor". A cheap cover might set you back by 2-3% but it is better safe than sorry. I was starting out in 2007, learning from someone. 2008 example I can give is: My mentor (an American) was convinced of the housing bubble back in 2006 but then if he tried to short the market he would have been wiped out (unless of course he had money like John Paulson did). So he purchased a long term cover, 2009 for cheap while maintaining his current portfolio. He even bought an option on real negative interest rates (betting Feds will drop the rates to 0% while there be an existing inflation), banks weren't ready to sell him those but eventually they agreed. He dint really make humongous returns to be touted in books, he did end the year in 2 digit positive return (read above 50%)
10. Well, a CFA question. Time weighted returns are a industry standard, incorrect or correct, for the reasons you gave is really beyond me.
The basic building block I work off is, investing works by looking what you can loose rather than what you can earn. If you do the reverse, look only at returns then you are no better than a gambler.
@avi - if the post is a bouncer, its because you asked for it
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