NEW YORK (TheStreet) -- Disciplined investors know it's important to stick to the plan. If a stock surge leaves your portfolio with 65% stocks instead of the 60% you'd intended, well, it's time to sell some stocks and move the proceeds to bonds or cash.
At least, that's the standard advice. But stocks have kept climbing this year, surprising many who thought last year's stupendous gains would be too tough an act to follow. Should you just skip that midyear rebalancing to keep riding the stock market wave?
First consider your investing time horizon. If you're investing for a retirement that won't start for 20, 30 or 40 years, a short-term tactical move such as delaying rebalancing probably won't make much difference. Asset allocation strategies are based on long-term market patterns that tend to smooth out short-term ups and downs. And lots of research shows that even the pros aren't very good at market timing.
Second, what's the opportunity cost of, say, keeping a higher-than-planned portion of the portfolio in a given asset class? Opportunity cost is the price you pay by not moving your money into that other asset. If you stay in stocks and bonds do better, you'll miss some gains.
Granted, bonds don't look very appealing right now, because rising interest rates could undermine bond prices. But even if bond returns are weak, they could beat stocks if investors start to get anxious about high stock prices, causing them to flee the stock market and drive prices down.