Rebalancing Stocks Portfolio After Regular Intervals

Purpose: To have an Acceptable Risk Level for an individual stock + Locking in Profit
You may have a predefined risk level that you may be able to tolerate for your existing stocks portfolio. For instance, you may NOT want MORE than 10% of your total stocks portfolio invested in a single stock for risk diversification purposes. Over time, this investment allocation may get out of synch. For example, Stock A may rise and become 30% of your total investment portfolio. Likewise, Stock B may fall and become 5% of your total investment portfolio. At this time, you may choose to sell some Stock A and perhaps buy more Stock B (if you think it may increase) or buy another quality stock to keep your risk level in line with your acceptable risk level limit or to lock in some profit from Stock A.




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