All six principles

Principle 06 of 06

Rebalance with discipline

Gains aren’t real until you decide what to do with them.

The idea

A portfolio left alone drifts. The best performers grow until they dominate, risk creeps up, and the mix no longer reflects what you actually believe about the future.

Rebalancing is the habit of regularly bringing the portfolio back to its intended shape: trimming what has run hardest, topping up what still has the strongest long-term case, and moving into new themes as the AI story evolves.

Why it matters

Rebalancing forces you to sell high and buy low in a systematic way, without relying on gut feel. It locked in real gains along the way and kept the portfolio pointed at where AI was going next, not where it had been.

How I applied it

Across the four-year journey

  1. 2024

    First major rebalance: trimmed chips after a big run and moved into data-centre and networking suppliers.

  2. 2025

    Rebalanced into a new energy sleeve and enterprise AI software as the bottlenecks shifted.

  3. 2026

    Banked gains, trimmed crowded positions and added inference, edge AI and robotics.

  4. Ongoing

    Review allocation every quarter, act when anything drifts well outside its target range.

In practice

My working rules

  • ✓Set target weights for each theme, with a tolerance band around them.
  • ✓Rebalance on a schedule (e.g. quarterly) or when a band is breached - not on emotion.
  • ✓Use rebalancing to move capital toward the next bottleneck in the AI story.
  • ✓Mind tax and costs - in Australia, holding periods can affect capital gains tax, so plan trims thoughtfully.

Watch out

The trap: rebalancing too often

Trimming winners too early or too frequently can cut off compounding and rack up costs and tax. Discipline means a clear rule - not constant tinkering.

Key takeaway

“Rebalancing is how a good idea becomes real money - and stays a good idea.”