Rebalancing
Periodically selling what has grown and buying what has lagged to restore your target asset allocation. It forces you to sell high and buy low on a schedule.
By Findley's Finance · Last reviewed: September 2026
Why it matters
Left alone, winners take over your portfolio — a 60/40 stock/bond mix can drift to 80/20 after a long bull market, leaving you with far more risk than you signed up for. Rebalancing back to target is unemotional contrarianism: trim the hot asset, feed the cold one. Once or twice a year is plenty; more frequent is just noise.
Concrete example
Your 60/40 portfolio drifts to 75/25 after stocks surge. You sell enough stocks and buy enough bonds to return to 60/40.