KEEPING YOUR BALANCE

It's common financial advice—once a year, you should review yourasset allocation among stocks,bonds, and cash, and rebalanceyour portfolio to reflect your investmentgoals. If you set up a 60/40stock/bond ratio 3 years ago, thatallocation is now reversed becauseof stock market woes and a racybond market. Contrarians say thatrebalancing means selling winnersto take on losers, but proponentspoint out that when a portfolio isseriously out of sync with asset allocationgoals, it probably holds toomany overvalued assets. Rebalancing,they say, is a way to sell highand buy low. If taxes are a problem,do your balancing act within a tax-advantagedaccount, where taxesdon't make a difference.