Portfolio is Bleeding Need Help
For all you investment advisors what portfolio allocations would you recommend going forward?
I am looking for long-term growth and 10-20% annual capital appreciation.
Additionally, I am currently down 24% the past few weeks and need investment advice. Is it worth realizing losses or waiting it out. I understand no one can predict the market but am looking for thoughts on the topic.
Thanks in advance.
The end result would be the exact same even if you were in the long-term growth sectors like green energy, marijuana, sports gambling, cloud computing etc. If you're down 24% that means you are far too heavily in growth instead of value. Your portfolio also most likely missed the recent increases in recovery plays like malls, cruise ships, oil, dining out etc. Adjust your diversification.
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Lmao 10-20% annual capital appreciation would put you up there with the best hedge fund managers ever. Kids these days...
it would also put you in the group as literally anyone who's held SPY the last 10 years... fucking boomers
Just because it was up that much the last 10 doesn’t mean it will be the next 10. SP500 long-term average is about 9%.
Temper your expectations and reallocate accordingly. 10-20% annual cap app is not sustainable. You may have yrs where you knock the cover off the ball, but you'll also have yrs where you get crushed with your allocation. Asset allocation is key. If you insist on shooting for those returns, you might consider some private / alternative investments (Generally not liquid with a very high beta relative to the s/p500). Real Estate (hard asset, not a fund of reit) could enter the mix but you have to know what you're doing., Over a 20 yr period, I had several triple digit yrs, but there were and currently are painful times where you can't move a property to save your life.
Without having any further details - the biggest things you need to start doing:
- Start by cutting your positions on green days. Just get out of them. Unless you have a true, long term conviction on a specific name - paired with an unbroken thesis and/or catalyst - punt. That will allow you to re-calibrate and get your mind right. What you say - long term growth oriented - and your return expectations/current losses tell very different things without knowing what you are invested in.
- Size your positions properly. I've learned to keep caps around 5 or so percent of my portfolio in a single name. Sometimes it can get towards 10, but I rarely now allow it to get bigger. It helps to limit your exposure to any one bad trade. Sure - it hurts being down 25% on a name, but when it's only 2 or 4% of your portfolio it's far more tolerable.
- Cut losses quickly when a trade goes against you. Know why you are in, know what will make you get out. I have no special sauce, magic or indicators to tell you - but find something that works.
- I'll reiterate - KNOW WHY YOU OWN SOMETHING. I was joking around the other month about a battery company I own where I have no clue what they actually do. They probably bleed money. Most certainly are a SPAC. I made some money trading it, lost some money trading it, etc. That is gambling and I'm under no illusions what I'm doing there. It's really, really easy today to get FOMO or simply buy things that everyone is talking about because it 'works'. Sure - it works until you post on here about being down 25%. I do not know if you fall into this category - I hope not - but if you do, really go through whatever you own and examine all of them closely.
- Segment your portfolios. Quote me all day long about a dollar is a dollar, but it's not when you get into this position. Know your own psychology. If you want an account looking for 10 to 20% returns - put money in a separate account, label it 'speculation', and write it off as basically learning how to trade, pure speculation, gambling, entertainment... take your pick. You need to set clear, manageable expectations for your accounts and trading.
If you do nothing else, start learning how to size your positions properly. Even if you entirely mess up, find the next Enron and pile in 5% of your portfolio - it's not going to break you... unless of course you find 20 separate Enron's... don't do that. But seriously, that coupled with thinking in % and not dollars has helped me immensely.
I want to caveat this as you used the term 'long term' - really push yourself on whether you are being honest with yourself on that one. It's really easy to say you are 'long term' on a name when it goes against you heavily, makes it easier to average in. Boeing is my favorite example - I bought that at damn near 300 when the MAX news hit before COVID, got scorched, averaged in and I'm roughly back to even now. It was a trade that went bad, turned into an 'investment' and big poppa Powell bailed me out. Luck not skill that's for sure there.
Bruh, just delete the Robinhood app. Problem solved.
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