If you have been following the stock market, it has been swinging wildly from one end to another end. All of us who are in stock investing obviously want to make money by buying low and sell high. However, for the past several weeks it has been a lot more difficult. Looking at my portfolio, most of my stocks (particularly in the equity) are on the negative side.
The question that I am trying to answer today is when do you actually buy or sell the stocks. It is very difficult to predict what the market would do consider because of my factors. Even though some of the businesses are doing well, their stocks are not. While some stocks continue to do well even the market condition says otherwise.
If you follow my blog, I put a majority of my investment in safe stocks such as Microsoft and Apple. The other holdings that I have are ETFs which are relatively safe. One third of the rest of my assets are in stocks that swing wildly; these are the stocks that I am willing to buy and sell and these are the stocks that I plan to make most money from.
The past several weeks have been difficult because majority of the stocks that I plan to sell are being depressed. Not only I am not making the money, if I sell them today I would incur some loss. What strategy should we use when it comes to these holdings?
There were a few times when I realized that some stocks I bought went up enough to make enough profit. Immediately after I sold the stock, the stock continue to climb. Conversely, there were some stocks went up to a level that I thought it was worth to buy. Instead, those stocks continue to come down to a level that I’ve ever seen before. Is that what we call buying / selling remorse? All I know is I feel like kicking myself on the behind.
I don’t think there is one way to deal with the fluctuations. Some would argue that you need to study the company, understand its market share and consider its prospect. Unfortunately, not all of us have the time to really study each indices. Even if you spent those time studying them there are not always spot on. One good example is the NIO, the electric auto company from China. For the past several years NIO was a good buy because of its prospect. Its stock price went up as high as $63. The first quarter of 2021 showed increased sales and that’s good news. Instead of expecting the stock price to climb up it continues to drop.
The strategy that I continue to follow is quite simple: Hold. The portfolio that I have continue to include companies that are more stable. Some companies such as those in the pharmacy are not as stable but they make up a small percentage of my holdings. The risks of my portfolio are considered low. My only option is to continue to hold these holdings and hope they will go up.
I would love to hear your strategy when it comes to dealing such uncertain market conditions.
Balancing and Enjoying Work Life 
Buy-and-hold is a tried-and-true strategy that has been employed by people like Bill Gates and Warren Buffett, although I got burned when the tech sector was devastated by panic selling back in March due to the fear of rising yield.
The market is driven by irrational fear, greed and ignorance. People make investment decisions based on rumor or bearish headlines that are intended to depress valuations. There are fortunes to be made on falling prices if you make the right option play. My position is that any type of leveraged trading is gambling and should be illegal.
Buy-and-hold is becoming irrelevant as market dynamics are shifting towards younger, unsophisticated investors who play the market as if it were a slot machine. They typically hold shares for less than 24-hours. The prevailing strategy is to bid up the price one day, take profits the next, and buy back shares on the dip.
It was fitting that the beaten down tech sector crushed first quarter earnings and revenue estimates even as skittish investors were dumping shares. It is all the more frustrating that technical data and positive forecasts matter not to the unlearned masses who make investment decisions based on social media frenzy rather than sound fundamentals. Ignorant, indeed, and it cost me tens of thousands of dollars because I held too long in a market that is totally detached from reality.
It’s perplexing when investors then forget about rising yield as there’s always some new worry or concern such as a cryptic tweet from Elon Musk. Really, how can a rational person make any money in a market that goes up or down based on who wins the Super Bowl?
Buy-and-hold can still work if you are willing to cut your losses. I won’t hold a position that is underperforming, or down 10%. So far it is working although my portfolio is trailing the S&P due to the sell-off in technology. The irony is that tech led the market before and during the pandemic, and it will lead again — meme stocks notwithstanding.
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I agree with you that today’s investors are akin to gamblers. However, personally I don’t think there is anything wrong as long as the investors understand the risks involved.
I’m not sure if this method of investing can be made illegal. In fact, I believe some companies welcome these investors (see AMC) because they help boost the standing of their stocks.
Today’s investors neither have the time nor knowledge to understand the valuations of any companies. All they care is to buy low and sell high so they can profit the differences.
Personally my strategy involves both buy-and-hold and buy-low-sell-high. I have large percentage of my holdings on stocks and bonds that I am holding forever. And I have around 40% of the rest of my holdings where I am able to churn.
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