Portfolio Rebalance: Turning Drift Into Scheduled, Boring Trades

Why Scheduled Rebalancing Beats Discretionary

The evidence is unambiguous: portfolios rebalanced on a schedule to a predefined target mix outperform portfolios rebalanced "when it feels right." The feel-right version under-rebalances winners (so risk drifts up), over-rebalances losers (so you add to the position at the worst times), and stops entirely during drawdowns (when rebalancing would add the most value). The fix is a mechanical rule — rebalance monthly, or whenever position drift exceeds a threshold — executed without emotion. The Rebalance card is the tool that executes it.

What the Portfolio Rebalance Card Shows

The Portfolio Rebalance card takes your target weights (defined in Portfolio Overview or imported from an optimizer output) and computes a concrete buy/sell list to move current weights back to targets. Each row shows: ticker, current weight, target weight, drift, recommended share change, estimated tax impact (based on available lots), and estimated transaction cost. A "minimize turnover" toggle skips names within ±0.5% of target. A "tax-aware" toggle prefers lots with long-term gains and avoids lots within 30 days of wash-sale risk. Export-to-broker integrations produce a preformatted order list.

Using It Without Breaking Your Cost Basis

Three practices matter. First, run monthly with a ±3% drift threshold — too often and you churn transaction costs; too rarely and your risk drifts materially. Second, always run the tax-aware toggle in taxable accounts — a rebalance that fires 40% short-term gains to realign a 1% weight drift is a tax disaster; the algorithm can usually hit 80% of the target adjustment with 20% of the tax bill. Third, don't rebalance during earnings weeks — earnings drift is large enough to dominate any ±3% weighting adjustment; wait for the week after and the trades are both cheaper and cleaner.

Where It Fits

Pair with Portfolio Optimizer which defines target weights, Portfolio Holdings for the source-of-truth positions, and Portfolio Rebalancing Drift card for the insights-tab drift tracker that triggers the rebalance.

Open the Portfolio Rebalance card → /app/portfolio