Buy low, sell high. Automatically

Summary: You’ve heard “invest and forget.” But what if forgetting slowly changes your risk without you realising it? This story explains how rebalancing protects your portfolio, improves discipline and keeps growth on track, without forecasting markets or overreacting to every move. There is much that investors can learn from India’s best defender on the pitch. Rahul Dravid built his legend on defence, but even ‘The Wall’ knew that blocking every ball was a slow way to lose a match. Surviving did not mean complete inaction, but adjusting to conditions: defending patiently, rotating the strike and stepping out when the moment demanded. Similarly, the sacred rule of ‘Invest and forget’, while sound advice no doubt, becomes a problem when confused with passivity. Because while you may sit back, your portfolio rarely does. Markets move, winners grow bulkier, and asset allocations drift away from the balance you once chose deliberately. Bull runs, especially, make this drift look like skill, even as risk accumulates unnoticed. This is where rebalancing comes in. It is the investing equivalent of rotating the strike: small, disciplined adjustments to a portfolio that keep the innings on track and risks controlled. It is not an activity for its own sake, but the act of restoring the balance you always aimed for. Because a good investor, like a good defender, knows when to be patient and when to adjust just enough to stay in control. By the end of this story, you will hopefully know how to get this balance right. But first, let’s begin from the beginning. Rebalancing, stripped to basics You start by deciding how you want your money split across broad buckets. Equity for growth. Debt for stability. Perhaps a small allocation elsewhere, depending on your needs and your temperament. This split is your target allocation, and it reflects three very personal realities: your goals, your income situation, and your ability to live through market ups and downs without losing sleep or making unforced errors. Rebalancing is the act of bringing your portfolio back to that target allocation, periodically and deliberately. Nothing more. Nothing clever. If equity has grown faster than debt and now occupies a larger share than you intended, rebalancing means trimming some equity and moving that money into debt. If markets fall and equity shrinks below your target, rebalancing means adding to equity. Nowhere in this involves forecasting the market, guessing interest rates, or making brave proclamations about what comes next. Rebalancing simply accepts cycles rather than predicting them. What rebalancing actually does Two crucial things. One is ensuring that excessive risk, more than you intended to take in the first place, does not end up destabilising your portfolio. Second, surrendering your portfolio entirely to market forces means you miss out on gains that naturally arise from buying a little low and selling a little high along the way. By periodically re-adjusting, you ensure you do not miss out. Let’s address these one by one. First, rebalancing resets the risk that unknowingly creeps into your portfolio. When left unchecked, portfolios tend to drift. The graph ‘The slow unravelling of the chosen mix’ shows how asset allocation changes over time when it remains untouched. As equity grows dominant and debt fades into the background, the portfolio ends up carrying far more risk than originally intended. So when equity runs up as it often does in long stretches, your original 50:50 split between equity and debt, for instance, may end up becoming 75:25, without you touching a single rupee. This does not feel alarming. It often feels comforting. After all, the ‘good’ asset did well. But rebalancing asks a blunt question: If the cycle turns, would you still be comfortable with the higher risk that the new split carries? If the answer is no, action follows. Some equity is sold. Debt gets topped up. The portfolio returns to 50:50. This restoration of balance is what ensures you are cushioned better when the cycle does turn. The recent market fall provides a useful illustration. Portfolios that allowed allocation drift fell much harder than those that kept risk in check. And the difference was meaningful.  Second, rebalancing grows your portfolio better. Investors understand, in theory, that money is made by buying low and selling high. In practice, behaviour moves the other way. Money flows towards what feels reassuring. Underperforming assets are avoided. Rebalancing gently pushes against this instinct. It trims as

This article was originally published on February 20, 2026.