1. Your desired asset allocation is 70% stocks and 30% bonds. Because the growth in stocks has outpaced the growth in bonds, you currently hold a portfolio with 90% stocks and 10% bonds. The total value of the portfolio is $120,000. You do not have enough money to rebalance by adding funds to your portfolio. What do you need to do to bring your portfolio back to the desired 70/30 allocation?
2. Why should investors periodically rebalance their portfolio?