The rules below are how Shishin manages its own backtested and paper-traded book; they are not a recommendation for any reader’s portfolio, and Shishin does not publish the exact thresholds. Figures come from a backtest over 1,258 US trading days (2021-05-12 → 2026-05-14). Both ideas below were evaluated in backtest and neither was adopted for the live stock book, they are written up here as research, not as shipped features. Past performance does not predict future results. Research output, not personalised investment advice.
Two questions decide what a long-bias book actually holds, and neither is “what do I buy.” They are: what do I sell to make room, and what do I add to when it’s working. Rebalancing answers the first; a top-up answers the second. Most of the discipline lives in getting both right.
Rebalancing is risk control, not return-chasing
The textbook case for rebalancing is about risk, not return. Left alone, a portfolio drifts: a classic 60/40 mix that is never rebalanced becomes something like 80/20 over a long bull run, quietly taking on far more equity risk than its owner signed up for. Rebalancing pulls it back to the intended exposure. The research consensus is that how often matters less than that you do it at all, annual rebalancing captures most of the benefit, and the choice between a calendar schedule and a drift-threshold trigger is mostly a cost-and-tax trade-off, not a returns one.
Shishin rebalances, but not to a fixed allocation on a calendar. Its rebalance is opportunity-funded: when the system identifies a higher-conviction candidate than something it already holds, it trims the weaker position, valued at the current market price, not the entry price, to free capital for the better idea. The trigger is not the date on the calendar; it is the arrival of a better use of the dollar. That keeps the book continuously sorted toward its strongest current convictions instead of drifting toward whatever it happened to buy first.
Adding to winners is usually a trap
The other side is adding to positions that are working, what trend-followers call pyramiding. The textbook discipline is sound in principle: add to winners, never to losers; make each add smaller than the last, because the stop is now further away and the remaining upside is smaller; and accept that the entire point is to extend the size of the rare big winners that carry a trend-following book.
In principle. In our own testing, the naive version, “a name is up, so buy more”, did not survive. We ran it explicitly and rejected it: across the sample, winners did not reliably keep winning, and the median forward return after a simple add-to-winner trigger was negative. Unconditional pyramiding is one of the faster ways to convert a good trade into a bad one, exactly as the risk literature warns. Adding to a winner is only an edge if the winner is genuinely still in the regime and setup that made it one.
…and even gated, it didn’t earn its place
The least-bad version was a heavily gated top-up: add to a held position only when several conditions line up at once, the broad regime still favours the engine that bought it (the momentum workhorse, Suzaku, in trending tape), the name has confirmed with a real gain rather than merely ticked up, the add is small (a fraction of the original) and permitted exactly once. One confirmed add, capped, in the right regime. That gating is the entire difference between an edge and a trap, it turns “add to winners,” which fails unconditionally, into a far narrower bet.
Narrower, but, on our locked five-year base, still not worth doing. Re-run end to end, the gated top-up changed the final NAV by roughly nothing: the confirmed winners it added to carried the book about as far without the extra dollars, and the mechanism added concentration risk for no reliable return. So we did not adopt it. The live book holds the simpler discipline instead, a fixed per-position cap (a four-position floor) and nothing that averages up.
What we kept
Of this whole capital-rotation family, very little earned a place in the live book. Conviction-funded trimming of the stock book and the gated top-up were both researched and both set aside, the first because the fixed per-position cap already keeps the book sorted without trimming churn, the second because, gated as hard as we could justify, it still added ~$0 net. What did advance is the one idea that puts otherwise-idle capital to work without touching the stock sizing: the idle-cash ETF rotation sleeve, now in paper-observation. The headline book remains the clean four-engine stack.
The lesson underneath all of it is the one that shows up everywhere in this research: the intuitive version of a good idea is usually too crude to survive contact with the data, and sometimes even the carefully gated version doesn’t clear the bar either. The discipline is to test both honestly and keep only what pays for its complexity. Here that turned out to be almost none of it.