Sell Your Winners & Buy Your Losers (Stock portfolio rebalancing explained)

It doesn’t seem to make any sense at first, but rebalancing is used by portfolio managers all over the world to manage risk and boost returns.

Financial Planning

Risk Warnings & Disclaimers

Capital at risk. Past performance is used as a guide only. It is no guarantee of future returns. Different funds and asset classes carry varying levels of risk depending on the geographical region and industry sector. You should make yourself aware of these specific risks prior to investing. This video does not constitute personal advice. We do not take any responsibility for third party websites and content we may link to from this video. Issued on behalf of Nova. Nova is a trading name of Nova Wealth Ltd, which is authorised and regulated by the Financial Conduct Authority (FRN: 778951) and is a limited company registered in England & Wales (10739796).

Data used in this video:

Historical Asset class returns

Northern Trust risk adjusted returns

Vanguard Portfolio Drift

Other reading:

00:00 Intro
01:59 Risk vs Return
03:54 Diversification
08:14 Stocks & Bonds
10:45 Within Stocks

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The author asserts their moral right under the Copyright, Designs and Patents Act 1988 to be identified as the author of this channel and any video published on it.

[chrishayward]

Initially confused by the seemingly contradictory argument in this video vs "Why I will always.." video but eventually got it and understood the return-risk re-balance benefit key points. Thanks.

[yeetboi]

Thank you, now I have 60% of AMC on my portfolio

[JamesShack]

Please let me know if you have any questions about this. Your questions and my follow up answers, will help future viewers make better sense of the topic!

[Oldskooladdict]

Thanks James. It made a lot of sense to me. As a fairly new and near 100% equity investor (excluding cash) I'm still mulling around my allocations, so the next video will be interesting too. Cheers

[NiKoMARIO]

Hi, at least in Italy there are taxes to be paid when you sell on your gain, so I think it’s always better to rebalance by “buying” the losers. If you have cash to spare :)

[RichardConnor]

That was so neatly explained and informative. Thank you James.

[kisnotel]

I wish I had watched your videos before I listen to my son who was learning to invest. Emotional blind love

[TimBrownTown]

You're the first to mention that developed equities are correlated with U.S. equities and that it may be better to diversify by separating developed from emerging instead of U.S. vs global funds. I'd definitely like to hear your thought on which baskets you recommend and some percentage examples. Thanks!

[jeremyhill]

Nice video and you made much more sense than I do at that time of night! I try to rebalance when buying and get all my dividends paid out not reinvested so I use them where appropriate to add to the sectors I want to increase in at the time.

[ChannelClosedDown]

Another amazing video, with a great explanation!

Just curious, what camera do you use to shoot your videos?

[timhanser]

Superb vid, I’ll write that on a post it and stick it on the fridge. Trouble is I’m so rubbish at stock picking all mine are big losers . Thanks.

[tilbo]

Such great, well informed videos, keep up the great work.
Can you do a video of self employed SIPP’s vs S&S ISA.

[dadblack]

Yet another great video. Thank you. Definitely worth watching a third time.

[karlosable]

awesome James! you have just become my go to finance guru guy

[whtmasterd]

I look to do a rebalance every six months or when I have sold a large high return asset and offset some losses against it to weed out the ones that just aren't performing.

[SteveDuts]

another great video with loads of good information 👍🏼

[JaredHernandez-vxwe]

Am I right in thinking, if you invest in a life strategy from Vanguard, the rebalancing is done automatically? Love your content btw

[llamudos]

How many times in a year should you rebalance?

[PrettyPennyClub]

Very good explanation. New sub. Was recommended your channel by a chum... it's a good pick :)

[Cleisthenes]

Peter Lynch watching this video and face palming.