Friday, November 5, 2010

My learning journey 2010 Part 2

Even as I have enhanced my portfolio performance over the past few months, I still have a lot of room to improve upon. I am currently exiting far too early in my positions, resulting in far less gains than the market wants to give me. Why am I not getting the desired returns? It is because I have not perfected the art of staying disciplined over the long haul. From now on, I need to remember (adapted from the book "The Guru Investor"):

1. It is essential to stick to my strategy for the long term. Even the best strategies have down periods, and it can sometimes take over a year to reap the benefits of a good method. If I try to time my use of a strategy, I'll likely miss out on some big gains.

2. Be prepared for short-term 10 to 20 percent downturns that are inevitable in the stock market - and the less frequent but also inevitable 35 to 50 percent downturns I will occassionally experience. I can't predict when they'll happen, but I will just have to roll with them if I want to reap the market's long-term benefits.

3. Give the internet a rest (my exiting my SembMar positions so early is due to this bad habit). Checking your portfolio every day, let alone every 10 minutes, can make you jump in and out of the market, which hurts my long-term performance.

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