It is perhaps the most famous piece of advice in the history of investing: Buy low and sell high. The logic is timeless—take profits from your winners and reinvest them into undervalued laggards to maintain a balanced portfolio.
However, recent market cycles are challenging this conventional wisdom. According to new research from
The Momentum Headwind
For decades, selling top performers to buy underperformers added modest value over the long run. But as Trivariate President Adam Parker points out, this strategy isn't a one-size-fits-all approach.
In the momentum-heavy markets of 2023, 2024, and 2025, betting against the "winners"—particularly in the technology sector—has been a costly mistake. For instance, the Roundhill Magnificent Seven ETF surged approximately 130% since the spring of 2023. Investors who sold these names early to "buy low" elsewhere missed out on historic growth.
The research suggests that while contrarian rebalancing works well when market gains are between -20% and +10%, the strategy loses its edge once gains exceed that 20% threshold.
A New Framework for Rebalancing
If the old rules are shifting, how should an investor approach a laggard? Parker suggests a more surgical approach rather than a broad sweep:
The Fundamental Overlay: Don't buy a "loser" just because the price is low. Look for companies with forecasted revenue growth and gross margin expansion.
Avoid the "Value Trap": Steer clear of underperformers that are seeing downward revisions in their earnings outlook. A low price is only a "bargain" if the underlying business is actually improving.
Respect the Trend: Within the technology sector specifically, the data warns against selling stocks with strong upward momentum. In a digital economy, scale often breeds more scale.
Who Should Care?
Navigating this "momentum vs. value" tug-of-care requires a clear understanding of your timeframe:
Long-Term Wealth Builders: If you are in the accumulation phase, fighting the trend can lead to significant "opportunity cost." Ensure your portfolio has enough exposure to the growth leaders that are currently driving the S&P 500.
Active Traders: The research highlights that "buying the dip" is only effective when you are confident a market bottom is near and a major recovery is imminent.
Risk-Averse Retirees: For those focused on preservation, rebalancing is still a vital tool for risk management, but it must be done with an eye on quality rather than just price.
The Bottom Line
"Buy low, sell high" feels like sacred advice, but the last few years have proven that nothing in the markets is permanent.
Success in 2026 requires a balance between discipline and adaptability. While we still believe in the importance of taking profits and managing risk, we also recognize that in a momentum-driven world, sometimes the best move is to let your winners run.
Before you sell your top-performing positions to chase a laggard, ensure that the "deal" you are buying has the fundamental strength to actually turn around.