Rebalancing: Selling High on Schedule

No trades required: markets re-weight your portfolio for you, daily. A 60/40 mix after a big stock run might quietly be 75/25 — carrying far more risk than the plan chose, at exactly the moment prices are highest. Drift is how conservative portfolios become aggressive ones without a single decision. Rebalancing is simply noticing, on a schedule, and correcting.

Rebalancing means trimming what's been winning and adding to what's been lagging — emotionally backwards, mechanically brilliant. It systematically sells a little high and buys a little low, not by forecasting, but by arithmetic. No one FEELS like doing this, ever, which is precisely why it must be a rule and not a mood.

Two sane triggers: on a date (yearly or quarterly — more is fiddling), or when an allocation drifts past a written band, say five percentage points from target. Both work; the one that fails is 'when it feels right,' which reliably means panic-rebalancing at bottoms. Our books rebalance on published schedules with the reasoning shipped in the email — the cadence itself is part of the strategy.

Not every wobble deserves a trade. A drift of a fraction of a percent costs more in spreads, taxes, and attention than it fixes — real systems set a materiality floor and ignore moves beneath it. Our engine skips sub-threshold adjustments entirely, to the whole share, for exactly this reason. Beware any service or habit that generates constant tiny 'rebalances': churn wearing discipline's uniform. You've seen the tell.

Execution order matters: work the sells first so proceeds fund the buys, checklist-style, no improvising mid-stream. And in taxable accounts, every trim has a tax cost — favor rebalancing with NEW money where possible (buying the laggards instead of selling the winners), and lean on sheltered accounts for the rest. Details vary by situation; the principle is universal: rebalance deliberately, not expensively.