The S&P 500 is up some 50% since bottoming out in March, a remarkable performance considering the pandemic recession. Now is a good time to think about your portfolio rebalancing strategy.

Investors should spend time creating a portfolio with an asset allocation that reflects their tolerance and capacity for risk over the long haul. Market moves inevitably push some of those values outside the allocated percentages. Let's say your portfolio is comprised of a classic mix of 60% stocks and 40% bonds. Since equities have swelled in value, you sell stocks and put the money into bonds to restore your 60/40 portfolio. (I'll focus on tax-sheltered retirement savings plans; you don't need to worry about tax consequences when rebalancing a 401(k).)

"Ignoring rebalancing entirely means the important diversification choices you likely have built into your portfolio are effectively undone," writes Gene Podkaminer and Wylie Tollette of Franklin Templeton Investments. "Rebalancing is, by design, contrarian."

In other words, rebalancing forces investors to buy low and sell high. Professionals disagree about how often to rebalance and when (if at all). I've interviewed people who use the calendar to rebalance annually, typically on a major holiday. More popular seems to be setting a boundary on the drift from the predetermined asset allocation. Investors rebalance when assets stray by, say, 5 to 10% from their desired goals.

Obviously, your rebalancing strategy is worth revisiting in light of the stock market's rise. There's another important reason, too. What will you do during one of the stock market's periodic crashes, asks Jonathan Guyton, principal with Cornerstone Wealth Advisors Inc. in Edina. The rebalancing technique is tough to stick with when markets dramatically plunge. "Thing is, rebalancing can be a scary thought in times of market stress," says Guyton.

Guyton recommends thinking through your approach before the market storm. The exercise will make sure you know your current allocation.

Despite passionately held opinions, no one really knows the best strategy for individual investors saving for their retirement. The agreement seems to be that the real payoff comes from establishing a rebalancing discipline for good and bad markets.

"Don't worry about catching bottom," said Guyton. "If you rebalance and you add equities when the market is down x-percentage and it goes down further, you're still better off."

Chris Farrell is senior economics contributor, "Marketplace," and Minnesota Public Radio.