A persistent bear market can shift your strategy without your even noticing, says Bohemia, N.Y. financial planner Ron Rogé. A daring 80% stock/20% bond portfolio in 2000, for example, would have morphed into a stodgy 65% equity/35% bond mix by 2003 if left untouched.
How often should you rebalance? You can do it by the calendar - say, on a birthday or just before the end of the year - but it's better to establish a rebalancing trigger of about 5% in either direction. In other words, if your stock allocation should be 80% but falls below 75%, it's time. In fact, if you had an 80%/20% portfolio at the market high in October 2007, you're getting close to a trigger point now.
NEXT: Trim back on treasuries