A useful way to think about this: rebalancing is a risk-management rule first and a return story second. Desk note: The core function of rebalancing is to stop winners and losers from rewriting your allocation without permission. Why investors care: That matters because unmanaged drift can quietly turn a balanced portfolio into a concentrated macro expression. $$ New\ Weight_i = \frac{Target_i}{\sum Target} $$ Plain English: Rebalancing is just returning the book to the risk budget you intended. Translate it into behavior: A strong equity run can make a nominally balanced book far more cyclical than the owner realizes. Where people usually get tripped up: The mistake is evaluating rebalancing only by whether it improved return over one recent sample. Keep this nearby on the next review: A useful review question is which funding, incentive or cash-flow channel is actually doing the work. That is usually where the edge is: not in the vocabulary, but in the structure underneath it.