I hope you have a clearer idea than me, I have started investing only 6 weeks ago and I have been adjusting the portfolio almost daily up to now. I understand that I have entered the market in the most volatile time it had somehow shocked me at first (mentally and economically) and I have been caught in this FOMO even though I have controlled it somehow (a part of my investment on T212 is NOW finally in Bonds/ETF and OIL commodity, plus some consumer staples stocks all of these instruments are meant for the long term).
Long story short, I have been up to a 5% Profit since I started 6 weeks ago up to yesterday when the market had a correction and I ended up (while sleeping, I am in Indonesia the time zone is different I can’t follow the stocks all night long but probably is a good thing otherwise I might have ended up panic selling and I see the post-market many stocks bounced somewhat back ) with a tiny 1.8%. I am sure many out there made bigger profits since March lows however I couldn’t join the good times for investors from March until the end of May as I started investing just 6 weeks ago.
My concern is more regarding the next future in the meaning of many saying the market will crash it will happen, it will not happen, sell the rip don’t buy the dip buy the dip, hold for the long term, don’t worry the swings, OMG sell sell sell! I am kind of slightly confused in light of this, and I wonder shall I hold to my investment (except the above mentioned Bonds,ETFs etc for long term already part of the plan) or for example sell now (or when?? Shall I wait after the earning reports that from my point of view will be positive for many tech companies meaning that I can get some more profit waiting?) before they eventually crash that for me will mean a much IRONIC thing as I bought high already? I believe I bought high but they might go higher and they are going higher especially the type of stocks I put most of my investment on (Google, FB, MSFT, ADOBE,ZOOM) to mention some.
OR shall I sell now with my little profit and buy the “momentum stocks” like Nio or Tesla or IPOs or whatever is coming then sell them after a while making profits and going back (maybe after a couple of months) to buy the big Tech companies following the kind of “traditional long term investment” which I actually started with in mind 6 weeks ago?
I don’t have a financial advisor neither I will get one, I believe I can find the right information through the internet with the right tools and pages.
If you guys can share your thoughts about this it would be great, I am sure many of you have a wider experience and different opinions, I will definitely keep doing my researches/studies to make the most rational decision however it will be greatly appreciated your help at least knowing what is your ideas related to the current market and the “normal” market conditions in general.
First of all, it’s really great that you have started investing and are working towards more financial independence!
I understand that you’re new and you’ll obviously make some rookie mistakes, but it’s all part of the journey that every investor has experienced as well when they started.
Some tips regarding your posts:
Ignore the FOMO noise and do your own research. Most of the time you don’t know who’s giving the stock suggestion and their expertise/background. For all you know it could be kid with 0 experience. Also remember that you’ll only see people brag about their winners and not their losers. Recency bias is also very dangerous.
You can’t time the market. If you’re afraid of downturns, just DCA so you’ll invest both during tops and lows. I highly recommend just putting a certain amount into a well diversified etf every month. This approach has a proven track record that has beaten almost all other strategies for a reason.
Once again, do your own research and learn from your mistakes. Buying and selling within just a few weeks is not investing. Search for long-term opportunities and invest if your thesis makes sense. Knowing what you’re investing in will both help you with avoiding panic selling and wanting to lock in profits too early. Learn how to find buying opportunities and HOLD. Only sell if your thesis changed / doesn’t hold up anymore or if you have found a better opportunity.
You’re going to make mistakes and that’s okay, we all did and often still do. That’s also what makes it fun and interesting. Good luck and let me know if you need help with anything!
Hey thank you so much for your helpful message and thank you for taking the time to write it.
It is really good to hear a true honest experience indeed what I read on the internet that is mostly about the stellar earnings everybody is making on momentum stocks which hardly I believe, I tried and got slapped in the face a couple of times. Thanks God is part of the normal process of learning and as long as it is not too hurtful is fine, a few lessons need to be learned.
I agree on investing in ETF as well, just that I like too many stocks (I have about 25-30 and I won’t go further, eventually trim a few to make it 20-25 as mostly suggested by long term successful investors) for different reasons I like them all and don’t really want to sell any haha. I am also keeping some cash, let’s say a 20% of my investment just aside and ready to dive into buying opportunities to increase the positions I already have in some of my favorite stocks (meanwhile I will try to keep that cash instead of running after the FOMO and trying to make quick bucks, your suggestions here are precious).
May I ask …for a buying opportunity you mean something like point 3 of this process?
I get a position on a stock for the long haul,
I add up monthly following the DCA (unless I do on a EFT, I also found some interesting ETFs and I would like to suggest you one that is not really diversified but is definitely a good pick for me, then depends on your style and believes of course but you know better than me I am sure. It is called ESPO, VanEck online gaming, just have a look at it if you feel to, it is the minimum I can do in exchange of your good tips.
For some market/temporary reasons the price in my watchlist stocks drop a 10-20%, I buy.
No problem at all. Regarding what you wrote, I do highly recommend (especially as a beginner) to not own too many stocks. It’s better to have a smaller portfolio first and learn everything you can about these companies and learn how to value them (let’s say 10 max.). Once you understand the fundamentals and principles better you can expand to 15-20 etc. After all, you rather invest more money into your number 1 pick than number 20 right? Owing more stocks is mainly for diversification and this loses most of its function going above 20/25 holdings.
Concerning the buying opportunity, only DCA if you’re afraid of an upcoming downturn as you stated in your first post. DCA is more effective for your emotions and that you sleep well at night. Many tests have shown that lump sum investing outperforms DCA.
Regarding your last point, I indeed recommend that you add more to a stock if the price drops temporarily, but only if your original thesis hasn’t changed! Stock movements are unpredictable in the short term. I’ve had stocks down >20% that have recovered and gone beyond after that. Time is your friend.
Thanks for the etf tip. I’m indeed aware of it and believe it’s very popular on this forum. If you need help with anything else let me know.
Use your eyes, go with your gut. Learning when something goes bad is more valuable then when it goes right.
Have clear strategies and targets, from long term to short. Don’t flip inbetween based on the SP.
PS the market crashing is inevitable, just the experience of knowing when, and the symptoms leading up to it, so to speak, is most effective for avoiding getting stung.
May I ask… I found out different theories and techniques about investing, one that I am still considering and I would like to get your opinion on, is the Stop Loss order. Do you believe it would be smart or not really a good idea to put Stop Loss orders of let’s say a 10% for example to long term stocks? Or another idea would be to change the Stop Loss order keeping it still at 10% from the highest price they reach while you are holding them (I don’t know if I was clear in my explanation, for example you own Apple, you bought at 100 USD you have one share and you set the stop loss order at 90 USD, then the price of Apple increase in a month to 120 USD so you change the Stop Loss order at 108 USD which is 10% from 120 USD the highest price the stock reached while you are holding it. If the prices increase to 140 then u set the Stop Loss order to 126 and so on.).
Does all of this make sense or I shall better let the stock go through the good and the bad times in the market and rather consider what we discussed earlier in this topic of adding up to the quality stocks during a correction?
If you are worried about crash you should know that USA is reporting GDP on July 30. And FED is currently in the “blackout period”. Meaning they arent telling anything until 28-29 July press conference. So you should keep your eye on that things too.
I only use stops on volatile swing plays (a day to couple weeks trading) to guarantee break even and to lock in profit. That way you have a safety net if you miss an alert. Key thing is not to set them too close to the action which just comes from experience. Annoying in the Invest/ISA theres no trailing stop, so you use alerts as reminders to keep moving the stop higher.
On long term investments (years/decades) I don’t use them at all.
Oh… I will be travelling overseas 28 and 29! haha! So I will carefully consider the Stop Loss order before I fly or eventually I will just forget about it and look to the long term horizon more positively…
Oh indeed I like this type of investing more. I didn’t put any stop loss order and I believe I won’t… I am just trying to make up my mind and make sure I do what I believe at the end I consider right…
Yes to this. I’ve been burned a couple of times by stop losses when I was first starting off and now I just don’t use them. I just check in daily to see how stocks are doing and if there is a 10 or 20 % drop then that’s a good discount. As long as you’re staying away from penny stocks this is totally fine.
not that easy… Not every country allows online trading with some brokers for example here in Indonesia they allow mostly local brokers or some others which I don’t want to use so I can’t connect to T212 outside the hotel where I stay and the only reason I can connect at the hotel is that our server is located in the US. I will be travelling for about 36 hours (4 flights from Indonesia to my hometown in the countryside in Italy heheh I hope I can connect to check along the way otherwise I will just relax and enjoy the travelling)
That’s right to the point, I need a strong stomach actually I don’t have it as I realized I get emotional and even sold my best stocks a couple of times for buying them after 1 hour or 1 day at a higher price during their rebound, if I am not an idiot I don’t know how to call myself. However, I didn’t do it again I rather waited patiently and indeed they bounced back but it was a little drop of a 5-10% I am just afraid if there is a 40-50% drop how I would react so probably best thing is to read news yes but don’t even check the account, unless I jump in to add up to my best stocks positions.
I am “virtually” separating (it would be great if in our account we could divide the stocks in different groups… short term/medium term/long term/dividends/commodities/eft/bonds and so on…) short/medium term and long term positions… on the first group I definitely set a limit loss order, at about a 3% lower especially if I am up a 10+%, on the second (which is the 80% of the 2) I will keep it the way it is…with no any limit loss order.
Thank you for your time spent to respond to my questions guys, really helpful for the morale and definitely for the pocket later
Just wanted to chime in here and reiterate that sometimes the best way to learn is to get a little burned.
When I started out, I was in the same boat as you (I think nearly everyone is).
Impulses tell us to sell when things get bad to limit our potential losses, and buy when things are at all time highs, out of fear we miss out. Overriding this natural instinct is sometimes really hard to do.
My advice would be to monitor stocks in advanced, setting key levels where you want to buy at in advanced. Create limit orders, to buy on those levels. This way, the emotion is taken out of the market riding up and down daily, and you only ever buy a stock for the price you already chose ahead of time.
Not saying this is the right way, but this is how I do it:
Choose a stock im keen on owning which has nice figures/price/value etc.
Allocate how much I am willing to put into a stock - eg: ÂŁ3000.
Check the charts to see key levels of resistance / buying opportunities.
Create numerous Limit Buys, staggered downward. Starting at say ÂŁ250. With a few more setup at different key support/resistance levels.
Sit & Wait. If it buys, then I know I got the stock I wanted at the price I wanted. If it dips even further then I already have more buys setup to grab the stock at cheaper prices. Then I hold for a month or more, or until I am happy with the profit.
This has allowed me to avoid selling stocks which otherwise have risen up in value and takes the daily emotion out of it. Everyone does it different, but this is what works very nicely for me.
I also run without a stop-loss, and I recommend everyone to ditch them.
Even if you hold them for a supposedly short term like a few days a week or until you make what you believe enough profit?
Your technique sounds good but a step higher, I guess I will need to do more homework before I apply it, I am for a more simple one that will probably keep me busy checking the stocks every day but at least I can “handle” it in this way for the moment… later on I will probably start considering the one you mention however it ends to the same point where we started… add up to the good positions once they drop instead of panic selling thank you also for your reply on this matter.
Yea no worries, if you want to chat stocks, message me anytime.
Some people on here swear by stop-losses, I just can’t stand them honestly.
The only way I could see a use for them is if you were to set them 30% away, just to save your skin … but then, why would you be buying a stock if there is the risk of a 30% drawdown. It’s counter intuitive.
Your choice completely - I just can’t see the use for the way I trade.
If you were day trading huge amounts of money, trying to scalp (which isn’t allowed here anyway) then that is a valid use of stop-losses. Otherwise, they just act as a very weak insurance coverage.
My way, I just have a look on the weekends for stocks I’m keen on or trends I think will playout the following weeks / months. Check prices, set levels, set buys and forget about them till they hit. If news comes out that affects my stock list, then sure - adjust to suit.
) with a tiny 1.8%. I am sure many out there made bigger profits since March lows however I couldn’t join the good times for investors from March until the end of May as I started investing just 6 weeks ago.
(I have about 25-30 and I won’t go further, eventually trim a few to make it 20-25 as mostly suggested by long term successful investors) for different reasons I like them all and don’t really want to sell any haha. I am also keeping some cash, let’s say a 20% of my investment just aside and ready to dive into buying opportunities to increase the positions I already have in some of my favorite stocks (meanwhile I will try to keep that cash instead of running after the FOMO and trying to make quick bucks, your suggestions here are precious).
