2023 and 2024 were boom years in the stock market—with some portfolios seeing 16–20% returns. But if you haven’t rebalanced, your allocation to U.S. large-cap stocks may now be dangerously high. In this video, Chip Addis explains how rising markets can create overexposure and why a disciplined rebalancing strategy is critical to managing risk. Learn when and how to rebalance—and what to expect if you don’t.
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The Boom Years of 2023 and 2024
2023 and 2024 delivered exceptional stock market performance, with many investors enjoying returns between 16% and 20%. It was a welcome boost after the previous cycle, and portfolios—especially those heavy in U.S. large-cap stocks—likely saw substantial gains.
But with those gains comes a hidden risk that many people overlook: portfolio imbalance.
When Growth Skews Your Allocation
Unless you’ve been actively monitoring and adjusting your portfolio, chances are your stock allocation has drifted upward, particularly in large U.S. companies.
For example, let’s say three years ago you had a 30% allocation to large-cap U.S. stocks. After the recent rally, that could easily have ballooned to 50% or more—without you making any changes.
This kind of shift might seem harmless while the market is climbing. But when volatility hits—as it has recently—those over-weighted areas can drag your entire portfolio down faster.
Why Rebalancing is So Important
The key here is rebalancing—realigning your portfolio to your intended target mix.
At Addis Hill, we follow a deliberate, consistent rebalancing process:
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We rebalance when clients take withdrawals.
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We rebalance when clients add new funds.
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And we conduct a comprehensive annual rebalance for every client account.
This keeps portfolios aligned with risk tolerance and investment goals, even during unpredictable market swings.
If You Manage Investments on Your Own
For those managing assets outside of advisory oversight, it’s tempting to look at recent gains and think they’ll keep coming. But history tells us otherwise.
“It never does, and it never will.”
Markets cycle. The biggest mistake is assuming past performance guarantees future results. And when the market turns, portfolios that haven’t been rebalanced are most exposed.
What To Do If You Missed the Last Window
If you didn’t rebalance before the recent downturn, don’t panic. Just keep this idea in your back pocket:
When the market settles and begins to recover, that may be your moment.
That can be a great opportunity to bring your portfolio back into balance—at a level that’s right for you and your financial goals.
Takeaway: Be Proactive, Not Reactive
Rebalancing isn’t about timing the market. It’s about managing risk and staying aligned with your long-term plan. So if your portfolio is riding high on recent gains, it might be time to take a closer look—and make sure you’re still on course.
