Rebalancing

What it is

Rebalancing is restoring a portfolio to its target weights after they have drifted.

Why it is a decision, not a chore

Every rebalance is a set of trades. That makes it three things at once:

It is	Because
A cost	Each trade pays slippage and commission
A turnover decision	How often you rebalance sets the turnover
A view	“Never rebalance” means letting winners run — an implicit bet

When it goes wrong

The failure mode is not rebalancing badly. It is not stating the rule, so the turnover — and its cost — never appear in the backtest.

A backtest that reports returns without a rebalancing rule has, in effect, chosen one silently.

How to check

Ask: how often, to what target, and at what cost? If the backtest does not say, the result is pre-cost and the cost is unexplained.