That's what many people think. Automatically buy low (the assets that haven't appreciated as much) and sell high (the assets that have appreciated more). And sometimes rebalancing does improve returns over time. Other times, more frequently, it does not. Regardless, the primary benefit of rebalancing is to maintain the desired AA and volatility ("risk") characteristics of the portfolio. Over many cases and long time periods, the impact of rebalancing on overall return is generally small, and slightly negative.The data says otherwise and I think it makes sense.... to the extent that a single asset class or sector ebbs and flows, rebalancing takes advantage of those ebbs and flows in a disciplined manner.
A primary reason investors do less well than the market overall is the impact of emotion. Rebalancing can help reduce the impact of emotions, especially a mechanical rebalancing scheme, so that is a good thing. I rebalance once per year, even though my AA might get quite out of whack over that time. History shows this is unlikely to have much impact on my long-term returns, and the impact is quite likely to be positive. The power of laziness!.
Source for graph below: Kitces
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