Here's a recent letter by Rob Arnott’s firm, Research Affilitates, entitled "Why We Don't Rebalance." The article discusses the behavioral components of portfolio rebalancing. As it relates to investing, our rationality typically gives way to our emotions which results in buying high and selling low; in other words, a refusal to rebalance despite the sound logic behind the action. Rebalancing should prove to add significant value over the long term, but at times it does not make sense for certain investors. This article summarizes the firm’s view on rebalancing: it is vitally important but is a client-by-client decision.