Nothing is more dissatisfying than seeing your portfolio down.
You work so hard to earn the money to invest it, finally begin to see some growth, and then the market dumps.
Now your stock portfolio is down.
Most of you aren’t ‘hedging’ against your losses like most financial institutions are either.
So, what can you do to navigate this bad weather?
Here are 3 tips that will get you through it.
Welcome to Franknez.com – if your stock portfolio is down right now some of you might be wondering whether you should cut your losses or not. Here’s what I’m personally doing.
Let’s dive right into it!
Join the newsletter to receive weekly market news and stock updates.
#1. Increase your position(s)
One way I personally take advantage of the market when my stock portfolio is down is by increasing my positions.
If you’re a long-term stockholder like I am then you understand the current market situation is only temporary and the market always tends to bounce right back up.
This means that any stock that’s red in my portfolio is at a discount.
Some of you who are part of my private community have received alerts and notifications of when I’ve bought a dip (both stock and crypto).
It’s these types of strategies that have allowed me to weather the bad storm when my portfolios are down.
Why buy on red days?
Buying on red days even if your portfolio is down means you will profit as soon as the market begins to trend upwards again.
If a stock you purchased is down -5% then it goes down to -10%, you can take advantage of buying the asset cheaper at -10% if you anticipate its value will go back up.
In this scenario, if the value goes up again and the original stock you purchased has broken even, then the other share(s) you bought low are up +5%.
If your conviction towards a stock or company is strong, buying heavy during the lows could significantly increase your portfolio’s value as the stock begins to climb again.
While many novice investors might panic at the sight of their assets declining in value, it’s best to stay calm and rely on your conviction and have a strategy in mind.
#2. Invest your money in other assets
Other assets you can invest your money in when your portfolio is down could be a business, a crypto wallet, or even in yourself.
One way I’ve invested my money during this bear market aside from stocks and cryptocurrencies has been in my business and in my health.
The reason we invest is to get a return.
So why not invest in a startup or even in yourself?
Because ultimately you are the vehicle that’s going to take you to where you want to be.
Think about how else you can make a return on the money you’re about to invest.
Nothing is ever certain, not even in the stock market.
Take a risk and invest in yourself.
Assets you can invest in other than stocks
- Cryptocurrencies
- NFTs
- Startup/Side Hustle/ Business
- Health
You’ll find that once you invest in other income generating opportunities, those same opportunities will eventually allow you to invest more into the markets and within one another.
This form of diversification is going to armor you up for when your stock portfolio is down.
Keep track of your net worth as well as the sources growing it to build your portfolio’s confidence.
#3. You can always play it passively
When your stock portfolio is down, you can always choose to play it passively and do nothing.
You understand building your net worth is going to take time despite what the market is going through.
Perhaps you don’t find cryptocurrencies or startups attractive, and that’s okay.
This third tip is to be patient and let your portfolio go through the growing pains.
Believe me when I say I’ve been there too.
The important thing here is to stay calm and not let your feelings control your financial decisions.
I know too well this is one of the hardest things about having money planted in the stock market.
But in the end, this all about taking in that learning experience so you can do better the next time an opportunity comes your way.
When should you cut your losses?
You should cut your losses only when you’ve identified an investment is a dead play or you are not seeing results after 1-2 years, especially if you’re going long on a stock or company.
Day traders cut their losses quick because they’re in the stock market for short-term gains.
Long-term investors should keep a close eye on what they’re investing in to identify whether there is future growth of a stock.
One way I’ve identified a potentially great long-term stock is by looking at the stock’s history chart.
If there’s been consistent growth for over a period of a few years, then you can assume the trajectory will follow in the coming years.
I created a list of these type of long-term stocks here.
I cut my losses on SPRT shortly after the merge with Greenridge because at that point I didn’t trust the company nor its partners.
Another stock I sold was AT&T because after a little over a year all it did was consolidate and its performance was not on parr with my expectations.
These are just my personal experiences selling stocks in the market.
AT&T has a great dividend, and I might create a portfolio specifically based on dividend stocks in the near future to further amp up my portfolio strategy.
Is your portfolio down?
Let’s start a discussion in the comment section below.
Is your portfolio down?
And if so, how are you navigating through today’s bear market?
The community and I would love to hear from you.
You can follow me on: Twitter | Facebook | YouTube | LinkedIn
About The Author
Let’s start a discussion!