Nursing a Bad Portfolio

To err is human but doing nothing when a trade goes bad (and moving towards worse) is diabolic!

What is bad with this portfolio (and what needs to be done)?

1. Too many "kids" in the family. Nurturing your "kid" requires a lot of attention which will spread thinly when lots of them exists.
2. No or minimal reserved buying power. Ask your Financial Advisor on the importance of savings, emergency funds, and contingency funds.
3. Probably without a stop loss plan or never executing such. When you're "kid" is approaching a danger zone you immediately intervene and put them to safety. Listen up! Set a stop loss level and execute it when market decides to hit that level.

When your fund is less than 500K, acquiring 2-3 stocks is the guidance. Here's why: when you put a 20% reserve buying power, 400K fund becomes available to buy stocks following two types of allocations.

Remember, the higher the allocated fund to your stocks, the greater the number of shares to be acquired, the faster gains come in when price appreciates, the earlier you can get out of the trade if need be.

Buy in Tranches

Going ALL-IN at one moment in time is highly discouraged. Plan your trades well (and execute the plan accordingly). Here's a sample buying approach:

Choosing Allocation Type 2 and spreading the buys in three waves. 1st Wave is 30% of the Budget probably executed when a favorable buy condition (trade setup) is seen on the charts. 2nd Wave (40% of Budget) is put in the trade when market is moving towards set expectations. Final Wave (remaining 30% of Budget) is poured in at your discretion (HaHaHa too lazy to think of another buy condition, please suggest one!).

Why are we doing this? In our Risk Reward Ratio planning, we specify Stop Loss level and when market decides to head that way we only expose 30% of our budget.

Final Words

For this portfolio, look that, overall, it's a 5.45% loss. Meaning we can plan a favorable trade which yields at least 7% gain, sell everything, execute that trade plan, and recover our losses here.

I know we are all humans. We are emotional beings. We hope. We love. We cling as long as we can.