January hurt....maybe February won't hurt as much...
January's final weeks caused me to have to rebalance my baby portfolio. Guess that is what I get for bragging about doing so well in 2009. Regardless, the market is a cruel teacher, but my education continues. I got to employ some hard won wisdom in cutting loose some of the positions that I was hanging on to for far longer than I should have. I was able to balance the loss of some of those losers with a small chunk of one of my winners. In the end, I came away from January with a break even in realized profit/loss and still ahead about 35% since I restarted my education in stocks.
So what was the great big wisdom that I utilized? To be honest, I would have to dig through a few books to find the exact quotes to post here, but summarized they amount to the following:
1. Everyone is different. You need to know your own threshold for risk and stick with it, within your comfort zone, no matter what everyone else says. If you don't, you might lose your shirt by following someone else's lead. Read about this one and lived the nightmare when my portfolio went away a bit over a year ago.
2. Remove the emotion, if you can, from your investing. No one likes to take a loss, and everyone loves to win. BUT sometimes in order to win, you must take the loss. You might need to cut loose those positions that go against you, and admit defeat. By doing so, you may be able to salvage the situation and live to invest/trade another day. Not doing so might mean the end of your money. Read about this one and have been grappling with the reality since I got back into the market a bit over a year ago.
So, over the past week I cut loose some positions that went against me and met my threshold for risk. Doesn't mean I won't go back to those positions and re-invest. Just means that I need to invest a little more of my time looking into them before getting back into them.
On the positive side, I got my federal tax return done, and am hopeful that Alstry's dire predictions won't impact the governments ability to return to me the money it owes me. Would love to have that little windfall to invest in some potential winners before the market re-corrects itself after this most recent plunge.
For some reason, I felt like sharing...perhaps it has to do with the very open environment here on TMF...perhaps it is the overwhelming silence in my household because the kids are asleep. Not sure, but it is nice to know that I can come here and share and learn from folks who are smarter than I.
Until next time, Fool on...