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Glossary
Styles

Rebalancing

Selling what has grown and buying what has not, to restore your target mix.

If shares have run and now make up 80% of a portfolio you intended to be 60% shares, rebalancing sells some and buys the laggards. It mechanically forces you to sell high and buy low, which is exactly what nobody can do by instinct.

It also quietly controls risk: without it, your portfolio drifts towards whatever has recently gone up most, which is usually whatever is most overvalued.

Figure

The market moves first, and recovers first

"recession declared"Share pricesThe economy

Shares fall before the data does and start climbing while the news is still uniformly awful. Waiting for the news to improve means buying after the recovery has happened.

Why it matters

It is a rule that makes the correct decision for you at the moment your emotions are least reliable.

The mistake everyone makes

Rebalancing too often, which racks up costs and tax. Once or twice a year is generally plenty.

Related terms

Asset allocation
How you split money between shares, bonds, cash and everything else.
Diversification
Owning things that do not move together, so that no single failure ruins you.
Bull and bear markets
Sustained rises and falls, conventionally marked at 20%.

See Rebalancing on a real company

SteadyShares pulls this straight from the filings for 1,100+ companies, alongside moat scores, DCF fair value and peer comparison. Free to look around.

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