In 2024, stocks surged, with the S&P 500 gaining 23% and cumulative returns reaching a 53% high since the late 1990s. This remarkable performance may have skewed portfolio allocations, prompting the need for rebalancing, particularly as U.S. bonds only returned 1%. Financial experts suggest realigning portfolios to maintain desired risk levels and ensure proper diversification across sectors and asset classes. Investors should consider their targets and periodically adjust holdings by selling overrepresented assets and buying into underrepresented ones. Tax implications should also be considered when rebalancing, especially in taxable accounts.
