A recap of portfolio rebalancing

As is well known, portfolio rebalancing is a rebalancing of the structure of wealth that brings the proportions of the different assets in total wealth back to their desired level. When an expansionary monetary policy initially leads to a rise in the proportion of money in wealth, money is then reinvested in other asset classes, and the rise in the prices of other assets increases wealth and pushe s down the proportion of money in wealth. As long as the proportion of money in wealth is abnormally high, we should therefore expect further rises in the prices of other assets (no longer bonds, because long-term interest rates will no longer fall, but equities, companies, real estate, etc.). When we look at the proportion of money in wealth at the end of 2020 in the United States and the euro zone, we see that the remaining portfolio rebalancing should normally lead to: In the United States, a rise in residential and commercial real estate prices, but not in share prices, especially not on the Nasdaq; In the euro zone, a rise in share prices and in residential and commercial real estate prices.