When portfolio declines most of us end up hiding
It is human nature. If the declines are due to volatile markets and you are convinced about the stock it is ok. But in good times, like it was for a few years now, we end up collecting a lot of stocks based on tips or “heard on the street” rumours. We have another problem.
As human-beings we have a deep-seated bias…
we like to hold on to our losing stocks in the hope that they come back and readily sell those that are “in-profit” since we think that we can lock in those gains. As a result, we sometimes sell our best and highest potential bets, and keep holding onto companies that are performing poorly.
And here’s the double whammy
That comes by holding onto underperforming companies. – when a stock you owned at 100 rupees falls by 30% (to Rs. 70) – for you to recover it has to rise by almost 50%- and you now need to realistically assess whether it is likely to rise by 50%. A low stock price can never help an underperforming company and equally a performing company can never be held down when the markets resume their activity.
In the long term – you should be only bothered about the company – the stock price will follow.
To forget about the stock price and focus on the company and its performance and shift to the winners. However tough it may sound, it actually could be the best time to review your portfolio – The falling markets have sent you many signals about the quality of the stocks you hold, these should not be ignored.
Let Marketsmojo help you Optimise Your Portfolio.
In a market where everything is going up, we forget the value of a well-constructed portfolio and end up buying stocks without thinking of them as being part of a portfolio. In effect we end up doing is create a portfolio which is much higher risk than we imagined.
Also, In the Risk Return equation, For the last few years we saw the Returns playing out. Now is time for Risk to rear its ugly head! When returns are high, it is easy to like High Risk High Return, as the Risk is not visible and hence it is easy to underestimate!
Stock selection can go wrong, A well constructed portfolio rarely does.
However tough it may sound, it actually could be the best time to review your portfolio – since the falling markets have sent you many signals about the quality of the stocks you hold, and this is the best time to repair and redo your holdings, so that they are in solid shape for the next rally.
How Portfolio Optimization will help you
Based on your risk profile, Our Portfolio Optimizer combines the power of our stock analysis process with the Best Portfolio Management Tool to help you within minutes to:
- Improve Potential RETURNS by:
- Weeding out stocks which could hurt portfolio returns
- Suggesting Switch ideas with higher potential returns
- Reduce Portfolio RISK by:
- Right sizing the portfolio
- Rebalancing portfolio across market cap segments
- Properly allocating the portfolio across sectors
We want you to manage your portfolio better & so offering the Marketsmojo Professional pack at a 50% discounted price of only Rs. 600 per month (paid annually). Besides the newly introduced “Portfolio Optimiser” you will be entiled to use all the existing power packed features.
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