Why I Trimmed Into Strength and Would Again
Selling a portion during an advance reduced my eventual return. It was still correct, and the distinction matters more than the outcome.
Late in an advance, a quarterly review showed a position well above its band. I trimmed back to target.
The price continued rising for several months afterwards. The trim reduced my eventual gain by a meaningful amount.
I would do it again, and explaining why is the most useful thing I can write about rebalancing.
What the rule is for
The ceiling exists because a position that grows through appreciation becomes a size I never agreed to hold.
I had agreed to a share of investable assets. Appreciation had taken it well past that. Continuing to hold the larger share is not a decision to hold; it is a failure to decide, and the difference only becomes visible during the next decline.
The counterargument I considered at the time
That the rise reflected something real, that trimming into a functioning thesis is leaving money on the table, and that the band should be reconsidered.
The last part is where the danger sits. Reconsidering a band during an advance is the same failure as amending a policy during a drawdown, in the opposite direction. Both are revisions made under pressure by a person with a position in the answer.
My policy permits amendments only in months when nothing dramatic is happening, and that month did not qualify.
What happened next
Several more months of appreciation, then a decline that took the price below where I had trimmed.
The proceeds from the trim were available during that decline and were deployed through the quarterly rebalance, at prices considerably below the trim.
So in the end the trim was profitable, which is a fact I want to state carefully because it is not the argument. Had the price continued upward permanently, the trim would still have been correct, and I would still be writing this.
Why outcome does not settle it
Judging a rebalancing rule by whether the price subsequently rose is judging a process by one sample of a random variable.
The rule is not a forecast. It is a constraint that keeps my exposure at a size I chose deliberately, and its value is that it operates whether or not I am right about anything.
If I let the subsequent price action tell me the trim was wrong, I will not trim next time, and I will end up holding a position size I never chose during a decline I did not plan for. That is the failure the rule exists to prevent.
The operational note
Trimming requires being able to execute. A rebalance that means retrieving a device and remembering a passphrase gets deferred, and deferred rebalances are skipped ones.
The working balance at the exchange I have used since 2021 is sized to cover a typical quarterly adjustment for exactly this reason, so that following my own rule is a ten-minute operation rather than an afternoon.
The summary
The rule reduced my return in that instance and it is why I still hold anything at all, because I have never been in a position I did not choose.
Those two facts are the same fact.
This is a personal account of holding through market cycles. It describes what one person did and why. It is not a recommendation, and past cycles do not predict future ones.