What is Portfolio Rebalancing?
Over time, a portfolio’s asset allocation naturally drifts from its target as different asset classes earn different returns. If stocks outperform bonds, a 60/40 portfolio might drift to 70/30, making the portfolio riskier than intended. Rebalancing is the process of selling overweight positions and buying underweight positions to bring the portfolio back to its target allocation.
Rebalancing is counterintuitive — it requires selling winners and buying laggards — but it enforces the discipline of buying low and selling high. The key challenge is doing it tax-efficiently: in taxable accounts, selling winners triggers capital gains taxes, so rebalancing must be coordinated across account types and consider tax implications.
Command
/rebalance [client name or account]
portfolio-rebalance skill to analyze drift and recommend tax-aware trades.
What It Produces
- Drift analysis table (target % vs. current % vs. drift vs. $ over/under per asset class)
- Tax-aware trade recommendations (prefer tax-advantaged accounts first)
- Asset location review (which assets belong in which account types)
- Implementation summary with estimated transaction costs and tax impact
Wash sale rules apply across all household accounts — trades are coordinated across taxable, IRA, Roth, and spouse accounts.
How to Customize
Edit the portfolio-rebalance skill to adjust rebalancing bands, add client-specific constraints (ESG, concentrated stock), or customize tax-aware trade logic.
See the Portfolio Rebalance skill for the full framework, tax-aware rules, and asset location guidance.
