No rebalancing at all also seems nonsensical because the whole point is to buy more when something is supposedly cheap. If it's price rises it gets less cheap if everything else is unchanged so at some point there should be some rebalancing by selling something not that cheap anymore for something else that's supposedly cheaper now. But when to rebalance? How often?

Great question. Mechanical investing has mechanical answers, of course -- once a year, once a quarter, whatever the backtested formula prescribes. But your question can also be viewed through the lens of the earlier thread about QQQ vs. QQQE.

Relying on JohnIII's reporting, QQQ, which mimics the Naz 100 index by letting its winners run and seldom rebalancing, has outperformed QQQE, the version that rebalances continuously to maintain equal weights of the constituents, by more than 2% per year since QQQE's inception in 2012, a significant margin that translates to cumulative returns of 457% for QQQ and 294% for QQQE.

The key components driving this outperformance are the Magnificent Seven. At a rough approximation, Nvidia is up 135x over that span; Tesla, 123x; Amazon, 11x; Microsoft, 10.5x; Meta, 10x; Apple, 9x; Alphabet, 8x. QQQ has benefited from all of that. As a result, those seven holdings have grown to represent more than half of the market-weighted index. By contrast, of course, they represent ~7% of the equal-weight QQQE, resulting in its underperformance over that 11-year period.

Most if not all of the Magnificent Seven have reached multiples along the way that would have tempted traditional value investors to sell. Yet riding these winners has worked out much better than rebalancing -- so far. It's also worth noting that with respect to Apple, Mr. Buffett has allowed his winner to run to an outsized percentage of Berkshire's equity portfolio.

As Jim points out, we all have a tendency to overestimate our ability to project a company's future performance. What rebalancing within a fixed set of securities like the Naz 100 seems to presuppose is that they are of relatively equal quality, so if market sentiment drives up the price of any one component, better to take the profit and rebalance than ride it back down.

But the components of the Naz 100 are clearly not equal. The Magnificent Seven have dominated in their respective markets, driving extraordinary returns. Selling them off along the way to keep their percentages of the fund small does not, in retrospect, seem like the wisest course.

Interestingly, the Naz 100 is market-weighted with modifications intended to avoid "overconcentration." It announced Monday it would rebalance later this month to reduce the percentages of its largest holdings. (This accounts for the anomalous one-day performance Monday that JohnIII reported.) The five biggest components -- Apple, Microsoft, Google, Amazon and Nvidia -- will be reduced from a combined weight of 46.7% to 38.5%. So the Magnificent Seven will still represent an outsized share of the 100-stock index, just not quite as outsized as they do now.

The criteria for selection of the Naz 100 components is different from your criteria, of course. The former were not selected for their perceived "cheapness." So you may find this analogy irrelevant. But your question crystallized for me the tension between a value sensibility and the historical benefits of letting your winners run.