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How you do it? This is how I do it...
Last Wednesday I shared that I added to some of my growth positions with the 15th paycheck. Looking at the market today, I could be thinking:
If I only knew about the sell-off last Friday...
If I only knew today would be even lower...
See, I don't worry about these things. I can't control the market nor I can predict the fluctuations.
So, here is what I decided to do many years ago, and I haven't found a better way. This works for me and my personal and family situation. FEEDBACK APPRECIATED!
- Every 2 weeks I use paycheck money to add to my portfolios. So I $ cost average. Currently, the allocations are set: 45% DRIP, 40% Growth, 15% Crypto. (I max out 401k and an IRA separately). My Real Estate portfolio is self-funding for new properties (it took years).
- I try my best to only invest in great businesses. Have I made mistakes? Hell yeah, however...
- I never go beyond 5% of cost basis in one position. This allows me to keep adding my positions in a controlled way, as the portfolio grows.
- I let the winners win. I only trim them on rare occasions.
- What about losers? You have to ask yourself, what is a loser... I don't sell stocks I am underwater except if I seriously find supporting data that tells me the business has a fundamental problem. I love comebacks and usually, this is how I reduce my cost basis.
- My bottom line on selling is: If I have doubts about adding to a position in red, then I ask myself why I hold it. This forces me to be objective. Sometimes I give a business an extra quarter or 2 to see if a business trend is confirmed. (I am in this situation now with a small $PTON position. Interested to see what Barry McCarthy will do. He has a great resume)
What you can expect doing what I do is:
- Because I am constantly adding, don't expect to see gains in the thousand %
- This might not work if you are looking to make the big bang winnings with a single stock, although 2020-2021 proved me wrong with $TSLA and a couple of others!!
- Peace of mind. I really value peace of mind.
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