Column By Natalie Pace
Hi Natalie. Tough tape these days for trading. I am tired of seeing slow declines in many of my long-term positions! Do you think it best to capitulate and sell currently declining positions, which you believe have great growth potential going forward? Signed Impatient With Volatility
Dear Prudent Investor,
First of all, I’m going to assume that we’re talking about a small trading portfolio, not your retirement fund. The strategies for nest egg rebalancing are very different from the strategies used in your trading portfolio (where you take on higher risk for higher gain, with money you can afford to lose). If you are talking about your nest egg, then please let me know, and I’ll do another blog on nest eggs.
There was a saying on Wall Street in 1999 that a monkey could throw darts at a wall full of Dot Com stocks and make a killing. Of course, as Warren Buffett is fond of saying when you get a recession, you see who has been swimming naked. These market aphorisms basically say that it’s easy to make money in bull markets, and you’re very likely to lose a lot of money in bear markets. I have to mention here that the last two recessions were more like depressions in losses. The Dow Jones Industrial Average dove 55% underwater in the Great Recession.
The NASDAQ composite index lost 78% Dot Com Recession and took 15 years to crawl back to even. Stocks are trading near an all-time high, even with the recent pullback.
The simplest answer to your question is that this is the 10th year of the current bull market. Statistically and historically, the data says we should be near the end. Even great stocks with huge potential can get drug down in a major correction. Even Apple, which had launched a game-changing smartphone and was giving it away for free (courtesy of AT&T), lost 45% between the highs of October 2007 and the low of March 9, 2009.
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Natalie Wynne Pace is the author of the Amazon bestsellers The Gratitude Game, The ABCs of Money and Put Your Money Where Your Heart Is (aka You Vs. Wall Street). She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical). Natalie Pace’s great, great grandfathers James Pace and Lorenzo Wright were some of the original pioneers of Graham County. Call 310-430-2397 to learn more about Natalie Pace’s books, private, prosperity coaching, and 3-day Financial Empowerment Retreats.
