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Look at how you handled the downturn in the market and see what you did right and what you did wrong. Consider the following:
- Did you initiate new positions when the sector was at 90 percent?
- Did you fall in love with your stocks and forget they don't love you back?
- Did you abandon the game plan because it's different this time?
- Did you own stocks in which the volatility was OK on the upside but not on the downside?
- Did you decide to disregard the chart pattern and the sell signals?
- Did you say, I'm a long-term investor� until your stock was down 50 percent?
- Did you initiate the buy portion of the trade correctly but not the sell side?
- Did you let your clients or friends sway you from your game plan?
- Did you hold onto a dead horse, lighting candles and hoping for a miracle cure?
- Did you heed the sell signals, so that your account then had cash available at the bottom?
- Did you take partial positions off the table, lessening the blow?
- Did you switch some of your holdings into defensive issues?
These are just some of the questions to ask yourself. The market is a continuing learning process, and we're never too old to learn. Take time to sit down and evaluate how you handled the last market cycle, and be honest with yourself. When things don't go our way, it is always easiest to look for someone else to blame rather than looking to ourselves for what we might have done wrong. And in some cases, you didn't do anything wrong.
Sometimes you do everything exactly right, given the information at the time, and the trade doesn't work out. That's life on Wall Street. Nothing is ever 100 percent correct. And remember, if you did the right thing and raised cash before a market downturn, holding only those stocks with strong relative strength, but your portfolio still gave back some headway, that's OK. It�s a big bet to go to 100 percent cash, but you are sitting better than a lot of people and have cash available to employ on the next opportunity. If you did gravitate from the game plan, use this evaluation process as a wake-up call to reacquaint yourself with your plan. Learn from the experience, so that the next time a high-risk situation presents itself (and you can rest assured it will), you will be ready to take action. If you ignore your mistakes, you will just keep making them over and over again.
Category: InvestingDownturn In The Market was written by:Author:Anthony GreenAdded: Mon, 04 Feb 2008 07:21:29 -0500 This Article Has Been Read 53 times View all Anthony Green's articlesAbout the Author: Collect your free stuff like stock recommendation and investment strategy articles onstock market on http://www.5minutetrader.com/benefits.php. |
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