5 Ways to Increase your Portfolio Value
We are all responsible for keeping our portfolios alive. Its up to the individual investor to make the right choices and pull the trigger when necessary on buys and sells. Mastery is taking the time to remind you of 5 helpful tips to increase your portfolio holdings.
1. Make Investing Friends
This does not mean buy the penny stock recommendations that flood your inbox. This means making relationships with fellow investors, not just icons on StockTwits.com (which is still a good idea). You probably already know who in your circle of people that cares about trading equities. Those real people are priceless tools that can help you decide to buy or sell a given security. Bounce your thesis for going or short on a given stock on your friend.
Say you want to buy shares of NetFlix (NFLX) or you are thinking about shorting Zynga (ZNGA). Does your friend agree or disagree with your rational? Have they considering something you may have missed about your trade?
You don't have to be alone on some island talking yourself into investment options. Don't just get "Wilson's" idea. Get an actual human being to give you constructive criticism. The best money managers alive have made are thanks to getting a 2nd, 3rd, or Nth degree opinion. You don't want a team of clones that are "Yes Men", rather someone who isn't afraid to tell you are Castaway-Wilson-Screaming crazy.
2. Know when to Fold em
There are no gains in your portfolio (besides dividends) until you sell your given equity to proclaim profitability. Even if you love your precious holdings, sell pieces of it during your determined time frame to cash in profits.
Don't wait until the last minute to sell a 'hot stock', even the best companies experience a pullback after a big run. Pay attention to the P/E (Price to Earnings ratio), when it gets to high its time bail. There are thousands of stocks to trade, you don't need to be married to your positions. When we buy a stock we have a thesis for why it might move up or down, including a price target. Don't be greedy, sell when you hit that target. Make sure to have a floor price on the stock that you must sell to protect any loses. Same can be said about a stock that has dropped from your price target after going on a decent run. If the stock backs down to far make sure to sell before all profits are lossed.
Many times momentum stocks can start to fall hard and share prices are plunged down thanks to short sellers. Recall the tale of Crocs Inc (CROX) and its unearthly run from $16 (its current price today) to $68 a share back in 2007. After it hit that $68 price the stock never returned to greatness. If you missed the boat there's no chance in hell the plastic shoe maker is going back to $60 a share.
Know when to fold em'. Know when to walk away.
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