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Why does rebalancing sometimes feel backwards, like selling my winners to buy losers?

Answer

That backwards feeling is exactly why rebalancing works, it enforces buy-low, sell-high discipline against your emotions. When stocks surge, they grow to a larger share of your portfolio than you intended, quietly raising your risk. Rebalancing trims some of the winners and adds to whatever lagged, restoring your target mix and locking in some gains.

It feels counterintuitive because you're selling what's hot to buy what's not, the opposite of what fear and greed urge. But the goal of rebalancing isn't to boost returns; it's to control risk so a runaway allocation doesn't leave you overexposed when the tide turns. A portfolio you set as 70/30 that drifts to 85/15 after a bull run has become far riskier than you signed up for. Rebalancing brings it back so a downturn doesn't hurt more than you planned.

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