Saturday, December 07, 2019

A Portfolio Quandary

    This post is a continuation of the $50 a month stock challenge I started October 14, 2019.  Click on, "No Commission Stock Trades", on the right side of the page to read from the start. 

    When  managing a successful stock portfolio, one has to free money in ones portfolio by selling underperforming  stocks. The real question becomes, "Is the stock merely underperforming at this time or was it just a bad investment". At least with dividend paying stocks one gets paid to wait.

   Setting goals (I just want to make money IS NOT a goal) makes decisions easier. To stay on track one can sell a stock at a loss and charge that loss against current gains to maintain ones goals.

    On the other side of that equation is if one maintains ones goals without the need to sell losers then why sell them at all. All stock trades are not profitable ones. 

    If there is negative company news that will effect the stock price for several quarters then it may be time to cut your loses and move on. In the absence of such news, I choose to hold a stock at least until the next dividend cycle.

     Every time your portfolio grows (from profits and dividends) your underperforming stock purchases becomes a smaller percentage of your overall portfolio. If you are making contributions to your portfolio it grows even faster.

     We are not getting rich (or going broke) but building wealth over time. Maybe you can afford to lose your money trying to "get rich" but I can not. 
 
     I hope you had a profitable week. Your comments are always welcome.

Disclaimer, I am not a professional.

 

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