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URL:  http://boards.fool.com/the-general-rule-for-a-diversified-portfolio-is-16820023.aspx

Subject:  Re: Handling stocks in an IRA Date:  2/28/2002  6:23 PM
Author:  Hyperborea Number:  33895 of 78166

The general rule for a diversified portfolio is to rebalance it regularly to maintain the target asset allocation percentages. Most people rebalance on a yearly basis.

The reason for rebalancing on a regular basis is that it forces you to sell some of the assets that have appreciated to buy more of the assets that have gone down in price. This has the important effect of 'Buying Low and Selling High' that many people only dream about.


Though here the momentum effect can also be the allocator's friend too. The studies that I've seen have suggested that rebalancing once a year, as you suggest, or even every other