How do you rebalance portfolios?

Instead of a traditional calendar rebalancing we implement what is known as the 5%/25% rebalancing rule. Asset classes tend to “drift” in the same direction (up or down) based on whatever economic trend has been occurring. The magnitude and direction of drift is random and not predictable. To take advantage of the random drift, rebalancing is best accomplished by allowing a percentage variation from the asset class target allocation.