Rebalancing controls risk. It brings our portfolio back to the level of risk that we determined was appropriate for us and that we were comfortable with when we first established our asset allocation plan. As we learned earlier in Chapter 12, one of the primary reasons we hold a diversified portfolio is that asset classes don’t always move in sync, and even when they do, they don’t all have the same expected rate of return or risk level. And, at times, one asset class, or segment of an asset class, might greatly outperform the others, resulting in the outperforming asset class or segment
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