When your portfolio is RED
I don’t usually bother posting about swings in stock, but maybe my perspective can help anyone else who’s feeling glum with their particular stock being down at the moment.
My portfolio is down $171,600 from yesterday and going from the all-time high a few months ago, I’m down over 31%.
That’s not exciting, it means I’m further from my goal than I was and it emotionally feels like I’m not making progress towards it.
One of the downsides about the market is that it’s not based on logic or fact, there is an emotional element. It’s tough emotionally, to risk your wealth on the unknowable future, and as tough as that is for you, you also can’t predict how other people will feel, and that is a huge part of what influences the market.
You can have the best growth case in the world for why your particular investment company is doing well and continue to grow, and the market may feel differently and the stock price will do something else than what you feel is the logical conclusion. This is part of the inherent risk of investing in growth companies — there is more potential for reward, but with reward comes risk.
But market movements are deceptive, the only thing that stops logic and growth from winning out over the long term is the halt of that company. If every day, that company is still selling their product, still attracting new customers, still delivering on deliverables, then the stock price will eventually catch up with the mechanics — it’s just a bit of froth along the way.
This is why it’s important to understand what you are investing in. To understand the business case, to assess whether that business case is able to be achieved, whether there are any physical roadblocks that exist to prevent the execution of that plan. And if your investment case is sound, and the long-term plan remains unchanged, then it’s just a matter of sitting back and waiting for the market to react to that, instead of whatever passing mood is the rage.
For me, the only regret I have is not having more free cash to invest. Those of you who predicted this dip are the lucky ones, for me, I dislike trying to time the market, so I don’t try to find the highs and sell them to have money for the bottom. The easiest way for me is to just hold and add when it’s possible and hold when it’s not.
If the game were easy, everyone would play and no one would make any money. We’re playing a game that rewards people that play it well and removes money from those who get swept up in the excitement.
