The bull market has made it possible for almost all financiers to get a good return on their investments.. It is worth fixing income, in other words, convert probable profits into real money?
Weighing the pros and cons and learning which strategy to choose, financiers can turn to professionals. Here is an opinion Ben Carlson, posted on his blog. Carlson is known as specialist in state management, Attachments, financial markets, also researches the psychology of financiers.
Best growth
March 2020 G. became a bottom, pushing off from which S&P 500 showed the largest price increase since 1950 G., rising by almost seventy-five percent. The specialist points to the growth of some stocks with impressive results: c 23 Martha 2020 G. Tesla has grown by almost 750%, Wayfair - more than 900%, Penn National Gaming — на 820%. Digital currencies are not left out: bitcoin soared by 650%, and Ethereum - more than 1000%.
Ask for yourself 5 questions
To choose the right tactics, Ben Carlson advises asking for yourself 5 issues and approach the solution in a balanced way.
1. Why, in principle, did I take these papers?
Obviously, this question was worth asking, before taking something. The answer to it helps to find the risk profile and time horizon., convenient for the financier. Law specialist, Stating, which is even easier to answer this question in terms of huge profits, than huge losses.
Financiers are prone to different strategies: someone prefers to buy and keep, "Whether it be hell or the highest water", the rest are more flexible, prefer to take profit either, against, sell losers. Ben Carlson cites almost all Tesla shareholders as an example, which having bought, decided to keep "more-least forever". The difficulty with this tactic is, what is needed is to be willing to put up with volatility, from time to time "piercing to the bone".
For those, who prefers to sell, Carlson advises to predict the exit strategy in advance, or, however, a few rules, who will guide the action.
2. Is there a best use for this money?
For example, for example, Jim Kramer, prof financier, co-founder of TheStreet money portal, not so long ago reported, that extinguished my mortgage with income, purchased from investments in bitcoin.
Ben Carlson notes, that some people have a higher upper risk threshold, when it comes to taking debt. The rest can't stand to pay interest and be in debt..
Consider your monetary goals. Specifically, this will help solve, it is worth taking profits and selling the winning shares.
3. Are there the best investment opportunities?
Ben Carlson points to the most common method - to think about something, it seems like you invested your own capital, if all the existing funds were now in cash and would have to start all over again.
“Would you invest in the same asset classes, funds or companies, which you currently own? What would you do differently? What would remain constant?"- it is worth reflecting on these questions, recommends a guru. With all this, it is necessary to take into account the tax results of the actions performed..
4. What is written in the nesting plan?
There is a big difference between knapsack and plan., emphasizes the author. Stock portfolio, mutual funds, ETF or all other attachments are, what you have purchased. Backpack control is that, what follows. That is why you need an investment plan, who will direct the actions of the financier.
Golden rules for investing are discipline, foresight, rebalancing, setting stop losses, planning decisions - regardless of whether, which way the markets are moving.
Carlson examines the consistency factor using Tesla shares as an example. For example, every time, when the share of securities achieves ten percent or more of the knapsack, it is worth cutting the position, selling part of Tesla and buying the rest of your backpack, which do not demonstrate such great results. The lower limit of the position can also be set, who will force you to take shares at any time, when they fall to less than five percent of the financier's knapsack.
Eventually, this method can be useful for more volatile investments, as the financier will have more opportunities to purchase lower, specialist advises.
5. What will bring the most regrets?
The author examines investing as a form of regret reduction.
"You are quitting use at the moment, to enable you to consume something else, with the hope for a huge amount of funds in the future ".
Someone is risk averse and able to withstand a market crash. Others are better suited to a risk management strategy, reducing volatility, even if risk reduction translates into lower expected long-term return.
Regardless of this, Ben Carlson suggests weighing, which the investor will regret more after, how the portfolio will show big growth:
– miss further profits, if you sell too early
– To see, how this profit evaporates, if you hold the portfolio for too long.
