what is rebalancing 
rebalancing refers to the process of returning the values of a portfolio s asset allocations to the levels defined by an investment plan those levels are intended to match an investor s tolerance for risk and desire for reward over time asset allocations can change as market performance alters the values of the assets rebalancing involves periodically buying or selling the assets in a portfolio to regain and maintain that original desired level of asset allocation take a portfolio with an original target asset allocation of 50 stocks and 50 bonds if the stocks prices rose during a certain period of time their higher value could increase their allocation proportion within the portfolio to say 70 the investor may then decide to sell some stocks and buy bonds to realign the percentages back to the original target allocation of 50 50 