would sell assets that had increased and
purchase enough U.S. small
company stocks so they again represent
10 percent of your portfolio.
How do you know when to
rebalance? There are two methods of
rebalancing: calendar and conditional.
Calendar rebalancing means that once
a quarter or once a year you will reduce
the investments that have gone up
and will add to investments that have
gone down. Conditional rebalancing is
done whenever an asset class goes up
or down more than some percentage,
such as 25 percent. This method lets
the markets tell you when it is time to
rebalance.