By Jimmy Mortimer | Partner & Wealth Advisor | Solidarity Wealth
It’s midyear, and you’re likely seeing headlines about portfolio managers rebalancing holdings. This practice is often driven by nothing more than the calendar, with quarterly or semi-annual check-ins prompting trades to reset asset allocations. At Solidarity Wealth, we take a different approach.
The idea of routine rebalancing sounds tidy. It can help keep a portfolio aligned to a target allocation and, in theory, control risk. But research shows frequent rebalancing has costs that go beyond simple transaction fees. A recent study by YCharts and Ritholtz Wealth Management found that quarterly rebalancing underperformed a simple “never rebalance” approach over the past three decades, with average annualized returns of 6.70% for quarterly rebalancing versus 7.14% for never touching the portfolio. The nearly half-point difference may not sound like much, but compounded over 30 years, this can add up significantly.
So why do we resist the drumbeat of calendar-driven portfolio moves? It comes down to how we view investing in the first place.
Buying Businesses, Not Trading Stocks
When Solidarity Wealth invests our clients’ hard-earned savings, we aren’t collecting tickers on a screen. We’re buying pieces of real, growing businesses, producing cash flow in client portfolios. Owning equity means our clients become partners in these companies, sharing in each company’s future cash flows and growth. That’s fundamentally different from trading shares because a chart says it’s time.
A big part of this philosophy is patience. It can feel uncomfortable to sit on your hands, especially when markets get noisy or a position has run up significantly. But real compounding happens over years, not quarters. Famed investor Warren Buffett often quotes his mentor, Ben Graham: “In the short run, the market is a voting machine, but in the long run it is a weighing machine.” That means resisting the temptation to trim simply because a stock’s done well this year. Think of owning your own business. Would you sell it simply because it’s done well in any particular year? Probably not. More than likely, you’d invest more into your company to grow it further.
Letting Winners Run
This is one of the hardest disciplines in investing. Human nature pushes us to lock in gains, fearing we’ll give it all back. But if you own a high-quality business that continues to execute, why sell it prematurely? We prefer to let our winners run.
There’s a real cost to constantly resetting your portfolio to some ideal target. It often means trimming your best performers and funneling money into underperformers. That might sound balanced, but it frequently interrupts the very compounding you’re after. The study mentioned earlier highlighted how the more frequently you rebalance, the more you risk pulling money away from your best horses.
When We Do Make Changes
That’s not to say we never adjust. But we don’t do it just because the calendar says so. Instead, we revisit our holdings when something about the business itself changes. Maybe the catalyst we were counting on has materialized (or didn’t), or management decisions have altered the trajectory. Sometimes we find better opportunities and make a swap. But it’s always driven by the underlying businesses, not by an arbitrary date on the calendar.
It’s also why we watch the broader market dynamics without feeling compelled to act on every move. Like clockwork, July 1st began the rebalancing in the market, where certain stocks that weren’t being bought in the first half of the year were suddenly outperforming the market on no news. That’s not investing, that’s repositioning for optics. In the business, this is called window dressing to appear that you’ve owned the hottest names when in fact you were in and out. We’d rather keep our focus on owning solid businesses that continue to grow intrinsic value for our clients. In fact, we might use down markets as opportunities to pick up more shares of such businesses. That’s smart investing.
Staying True to Client Goals
Ultimately, our approach lines up with the objectives of the entrepreneurs, executives, and business owners we serve. These are people who built wealth by having conviction and staying the course. They don’t want their portfolios micromanaged to hit some arbitrary target. They understand the dynamics of the real business world and want to hold shares of great companies and let time do the heavy lifting.
Keeping Perspective
Markets go through cycles, and volatility can test even the most disciplined investors. But selling pieces of businesses you still believe in just to meet a rebalancing schedule doesn’t serve your long-term interests. We think it’s more important to have the conviction to hold, to let quality companies do what they do best—grow—and make thoughtful adjustments only when the investment thesis itself changes.
If you’d like to talk about how we manage portfolios in line with your goals (without letting the calendar call the shots), we’re always here for a conversation. Reach out to us at info@solidaritywealth.com or call 385-374-1665 to schedule a discovery call.
About Jimmy
Jimmy Mortimer serves as the Chief Investment Officer at Solidarity Wealth, bringing decades of investment experience and strategic portfolio management expertise to the firm. His passion for investing began in high school in the late 1990s, when he built his first stock portfolio. Those early experiences shaped his investment philosophy, emphasizing prudent risk management and long-term financial stability.
In 2006, Jimmy joined Wells Fargo Investments as a Senior Trading Associate, later becoming part of Wells Fargo Advisors’ largest team in the Intermountain West. There, he managed stock and bond portfolios for high-net-worth clients, developing a deep understanding of portfolio construction and wealth preservation strategies. While working, he pursued graduate studies at the Heider School of Business at Creighton University, specializing in financial analysis and portfolio management.
Recognizing the evolving needs of investors in a changing economic environment, Jimmy has spent the past decade refining his approach to income generation and portfolio diversification. He focuses on designing strategies that prioritize stability, liquidity, and risk-adjusted returns, helping clients preserve and grow their wealth across market cycles.
In 2021, Jimmy co-founded Solidarity Wealth, an independent wealth management firm serving successful entrepreneurs, executives, and multi-generational families. As CIO, he oversees the firm’s investment strategy, applying a disciplined and research-driven approach to portfolio management. His experience in risk-managed investing allows him to develop strategies tailored to clients’ financial goals, with a focus on diversification, income generation, and long-term stability.
Solidarity Wealth is a registered investment adviser. This material is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Solidarity Wealth and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Solidarity Wealth unless a client service agreement is in place.
