The reasons for this are several. First and foremost, rebalancing increases long-term portfolio return while reducing risk. Second, failure to rebalance a portfolio of stocks and bonds eventually leads to an almost all-stock portfolio, because of the higher long-term returns of stock, resetting your return-risk combination to a higher level. Last, and most important, the habit of rebalancing instills in the investor the discipline necessary to buy low and sell high.
