Re-Balancing the Portfolio

[mtgordon]

How important is it to rebalance your portfolio? Two sub questions are how often you should rebalance and how accurately you should rebalance.

I have one stock that is suppose to be 15% of my portfolio and has done very well compared to the rest. I've put some money into the rest to balance but it is still 18% of my portfolio. By the end of the year I will be able to take it down to 17.5% (assuming current prices).

If I sell some of the stock I will have to pay taxes on it and it has been invested less than a year so no capital gains benefit. Is it worth the taxes to take it down the extra 2.5% or should I just keep putting money in the other stocks to gradually drive it down?