Everyone has heard the term "Buy Low and Sell High" well that may or may not be true. Just because you see a small slump does not mean to panic. With Individual Stocks there is a good time to sell most definitely. But remember that Mutual Funds are more of a long term investment, where that is usually not the case with Individual stocks that need to be more closely monitored to produce you an income potential.
Have I had duds for Mutual Funds? Absolutely but when the market takes a high swing like it is now and they are still not making money this is something definitely to be mindful of and look at this mutual fund. You must question yourself, are there better things in the market and within your family of funds that is going to make you money instead of losing it. About a year ago I had a Principle Emerging Market fund that I trusted my Financial Advisor on. It was a dog, a dead dog. I should have done my homework prior to letting him put me in this fund and I would of found it had a much greater history of losing money than making any money. I switched Financial Advisor due to various personal reasons. My previous Financial Advisor was good, he just made a mistake here and put my money in a bad location on this particular Emerging Market Fund. When it got back up to break even, I transferred the funds to another Principle holding. These kinds of transfers with in the same family of funds are free with no penalties or charges to you. After switching Financial Advisors going from LPL to J.P. Morgan Chase I made the call on my own to transfer these funds into a Principle S&P 500 fund I liked. But it is very important when transferring funds it is always in your best interest to stay within the same family of mutual funds to avoid charges and fees. Since I chose to do this in July of 2013, this transfer to the Principle S&P 500 fund I personally chose has warranted a 8.5% gain, instead of bouncing around an losing money in the Emerging Market Fund I had prior. I don't know about you, but I would much rather see an 8.5% increase in the past 4 months, than having a fund that is bouncing around up and down for years making me no money. Money is the name of the game. If you are not making money in a market like this something is definitely wrong in your portfolio or with your mutual fund and stock choices. So never be fearful of finding a better choice. You just have to be smart about it.
Do remember that the market changes. What is good for you today may not be good for you a year or two from now. Especially with Emerging Market Mutual Funds and Individual Stocks. Mutual Funds are mainly funds that you can get it and forget it. You just sit back and watch it grow. Will the have bad years...absolutely. Will they have good years...absolutely. But you must follow the history and do your research. If the good does not out weigh the bad significantly then there is an issue that you may need to be taking a second look at. Having a mutual fund make 20% this year, 15% next year losing 5% the follow is not bad. Yes it had a bad year, but overall you made 30% in the last 3 years or an average of 10% per year. It is for sure a hell of a lot better than a passbook savings or CD at the bank or even an Annuity. So who came out better, them or you? I will take a 10% or more average anytime.
My personal goal is to make at least 10% a year in my portfolio. Will I achieve that 100% of the time. No, and most likely you will not either. But over time everyone should make 10% or more in their mutual fund holds and individual stock holdings. If over a haul of 3 years or more you are not averaging at least 10% or more you need to be sitting down with your Financial Advisor and having a very serious talk on how you together can form a plan to get you there. Since the recession of 2008 the opportunities of making big advances in your portfolio are there. If you have failed to make these huge advances in your mutual funds there is definitely a big problem that needs to be worked out with your financial advisor.
Lets talk about Individual Stocks for just a moment. Many people including the so called experts have a wide variety of opinions. I watch CNBC daily. I also watch Jim Cramer everyday and have it set to record everyday. Somehow there are always fast differing of opinions, even by the so called experts. I tend to like Jim Cramer very much. Do I think that he gives good advise? Yes. But I don't agree with him on everything. Sometimes after doing my own research I agree with him 100% on a stock. Sometimes I think he is have a dream or fantasy. So no, I do not take all of Jim Cramer's advise at face value and nor should you. You must do your own research and form your own educated opinions based on this time and effort you have put into doing good hard research of your own and finding what you feel confident and comfortable investing in. Individual stock are more of a guessing. Lets look at Pfizer for example. A good company. Has had some slow grow periods but it is up on the market for 2013. All of a sudden they get a huge lawsuit over one of their most popular medication. What is going to happen....WHAM the stock takes a big hit and down it goes. This is why you must have a different strategy with Individual Stock than you do with Mutual Funds. The buy low and sell high adage works lots better with Individual Stock. Sit back and what for your 20% to 30 % increase on the stock. Sell!!!! Taking your money running and waiting for your next opportunity to reinvest in another promising stock. When to revisit and rebuy in this example. When Pfizer does take a big hit due to a lawsuit or deregulation of one of its medications. Again taking advantage of buying low and selling high after its recovery. Never be afraid to take your profits and run with an individual stock. Okay you make $1000 today but if you would have waited 3 days you could of made $1500. So what? It is better than waiting those 3 days and seeing your profits dwindle to $200. Then you take that $1000 and you add it your buying power and buying more stock when the opportunity is good and you have done your research to avoid a dog.
Gus S.
Disclaimer:
Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.
No comments:
Post a Comment