Week 47 Day 5: The Emotional Cost of Rebalancing: Why Most People Fail

Rebalancing sounds simple on paper. In practice, it requires selling what just made you money and buying what just lost you money. After a year where stocks returned 25%, the last thing you want to do...

Rebalancing sounds simple on paper. In practice, it requires selling what just made you money and buying what just lost you money. After a year where stocks returned 25%, the last thing you want to do is sell stocks and buy bonds. After a crash, the last thing you want to do is sell safe bonds and buy terrifying stocks. That is exactly why it works.