What should you do when you start to feel that the markets are under pressure? You start to notice that some of the holdings in your portfolio are no longer in the green. Some are flat while others are in the red. Should you stay the course or should you sell?
First of all, if you are losing sleep regarding your portfolio, you should call your advisor. If you are a self directed investor, perhaps hiring an advisor to review your portfolio on a one time basis is an option for you. Some advisors offer this service. Either way your goal should be to reaffirm or reinforce your investment strategy and portfolio design.
In my own practice, portfolios are optimized while looking back through various market cycles. This gives insight into how the portfolio should perform over an extended period of time. Buy, sell, or hold decisions should be made to advance the long term objective you set for your initial portfolio. Be careful not to make decisions based on some frenzied television personality.
Financial news content can be a little confusing to investors. Most of the time there are two opposing views that appear to be in stark contrast when in fact the major difference is simply time horizon. While an active trader might not see the market as favorable the investor might see the market as ideal.
Investment decisions and trading decisions are not the same thing
Much of the investment discussion these days revolves around trading ideas and short term opportunities. This is in stark contrast to the more investment driven thought of the past. Tweets are moving markets. Are you missing out in your portfolio? I don’t believe so. Most of the time, too much activity in a portfolio leads to speculation and miss-timed moves. Investing is not unlike driving on an icy road. Hold the wheel as still as possible, don’t make any jerky moves, look ahead, and pay attention.
Never forget to keep your investment objective fresh in your mind and don’t be afraid to revisit your decision making process. Most importantly, be careful not to be influenced by the media.
Ryan
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