FULL QUESTION:
Rick, I own BITQ , BITW & BITB. It has grow from 1% of my portfolio to 4.2%. Do you think it is time to take some off the table and pair it down to 1 – 2% ? It is all in a Roth IRA. The rest of my portfolio is 50% stock mutual & 50% bond mutual funds in a Traditional IRA. I am 70 years old and have been in the market since I was 23 yrs. old. Love your podcast. You provide a valuable service.

ANSWER
There are 2 schools of thought on this. The first, which is more traditional and broadly accepted, is that you certainly should periodically rebalance your portfolio. By doing so, you insure that your portfolio allocation maintains your desired model. It also helps you sell assets at a profit and buy others at lower prices. In your case, for example, you’ve enjoyed massive gains in the crypto sleeve – hence it went from 1% of the portfolio to 4x as much. By rebalancing, you’d sell 3 pct points and bring the allocation back to your original 1% – which is what you wanted when you started. Taking profits is a great move, no? Since your investment is in an IRA, taxes on the gains are not an issue.

The other viewpoint – particular to crypto – is that rebalancing is less profitable. This camp argues that crypto is rising fast, with lots of room to grow. Why sell 75% of the position if that position is poised to sharply outperform all other positions? Let it ride, no? This argument is offset somewhat by those who recognize that crypto, despite its outperformance potential, often incurs big downturns – and by rebalancing when this happens, you keep selling high and buying low, ending up with more gains at lower risk than those who HODL bitcoin. Since your investment is in an IRA, taxes on the rebalance churn are not an issue.

So…up to you.