Investing can feel like a roller coaster — especially during times of heightened volatility. Recent headlines around tariffs and global trade tensions have added fresh uncertainty to the markets. While it’s tempting to react emotionally, these periods of turbulence present a valuable opportunity: a chance to get back to basics by getting back to your target allocation.
That’s where rebalancing comes in.
What Is Rebalancing?
Rebalancing is the process of realigning your investment portfolio with your intended mix of stocks, bonds, and other assets. Over time, different parts of your portfolio will grow at different rates. If left unchecked, this natural drift can expose you to more risk than you intended.
For example, imagine you started with a balanced portfolio of 60% stocks and 40% bonds. After several strong years for the stock market, your allocation might shift to 70% stocks and 30% bonds — giving you a riskier profile than you initially planned. Rebalancing brings things back in line.
Why It Matters
Rebalancing helps ensure your portfolio stays aligned with your long-term goals and risk tolerance — not with the latest market trend or headline. It encourages disciplined investing by prompting you to buy low and sell high — trimming outperformers and adding to areas that have lagged.
During times of volatility, like we’re seeing with the recent tariff-related market swings, rebalancing can be especially valuable. Rather than chasing returns or panicking over short-term losses, it allows you to respond with purpose: by revisiting your plan and restoring your portfolio to its intended shape.
The Cost of Not Rebalancing
Ignoring rebalancing can quietly derail your financial strategy. Over time, your portfolio may become overloaded in a single asset class — increasing your exposure to risk just as markets turn south. We’ve seen this play out before: investors who let tech stocks balloon in their portfolios in 2021 often experienced outsized losses in 2022.
At Condor Capital, we handle rebalancing on behalf of our clients as part of the ongoing service we provide. This disciplined, systematic process not only helps maintain your target asset allocation but also involves realizing capital gains along the way when necessary. While realizing gains can trigger taxes, we believe it’s a worthwhile tradeoff to keep your portfolio aligned with your long-term goals and risk tolerance.
Rebalancing isn’t about timing the market — it’s about honoring your plan. In volatile environments, like the one we’re in now, it’s a way to cut through the noise and focus on what you can control, providing you peace of mind going forward.
