Money moves

Riding out the ebbs and flows of financial markets

Stock market investors know that ebbs and flows are commonplace. As I write this, I’m watching some of my favourite companies lose ground in my portfolio, and I’m trying not to give in to the urge to push the sell button as so many others are likely doing at this time

I decided to reach out to Benj Gallander, co-founder and president of the investment publication Contra the Heard, for a reminder of some of the items to take into account when a downturn in your investment portfolio happens and you’re assessing whether you should buy or sell a position.

Here’s what Gallander had to say:

● Whenever I buy a stock, I set an initial sell target. That effectively grounds me and takes some emotion out of the sale decision. Normally I sell 50% of the shares, at minimum, around that target price unless there are special circumstances. Often enough I sell all of the shares.

● There will be a stock market blowoff, but knowing when that will occur is difficult. What we do know is that markets are at record levels. Thus, probability dictates that the downdraft will be sooner rather than later. That does not mean that one should sell willy-nilly. Rather, consider paring back on positions that have done what you had hoped.

● When adding or reallocating funds, beware of buying what is hot. Those positions will likely fall more in the downturn. This is a time of fads, whether it be cryptos, special purpose acquisition companies (aka SPACs), the metaverse, etc.

● Some pundits suggest that there is no need to panic. I disagree. I believe the key to panicking well is to do it before everyone else does and there is a major downdraft.

● Practice patient investing while ignoring the daily pulse of the market.

As Gallander notes, investing is tricky, and I have to remind myself not to be influenced by the daily pulse of the market. Instead, keeping in mind my short- and long-term goals is key for me when it comes to pushing that sell button. As always, you should do your own due diligence and consult an investment professional when necessary before making investment decisions.

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