Home » Investing

Recommend Investment Actions Based On Your Investment Strategy

22 September 2008 No Comment

Your actions in the stock market during this unique time should be consistent with your investment strategy that you have already bought in to. If you haven’t determined what your strategy is yet, you need to do that immediately. Your actions should be consistent with your strategy no matter the stock market environment looks like. Let’s take a look at potential actions to take today based on investment strategy.

Buy and Hold Strategy

If you are in this category, you are doing your best to build long term positions in a Buffett-like fashion.  The only time you sell a position is when there is something wrong with the company itself, where the company has lost its competitive advantage.  Typically, you hold the position through thick and thin unless something extreme happens.

If this is your strategy, the most important aspect of it is the BUY.  When and how you buy can determine how profitable you are or even determine IF you are profitable.

In today’s environment, this is a good opportunity for these folks to be buying great stocks.  I’d recommend stocks like Philip Morris Int’l (PM) which is at a great buying level.  If you have a long term perspective and are trying to acquire solid positions over time, now is a time to beef up those positions.

Buy / Hold / Sell Strategy

If this is your strategy, then you are trying to combine the buy and hold philosophy described above with trying to take advantage of potential short term moves in stock prices.  This is typically the category I fall into, but like myself, most who are in this category are probably struggling in today’s environment.

If this is your strategy, a rally like we just had at the end of last week might warrant a sell in some of your positions.  When the overall trend is down, and we have a big rally, this is a good opportunity to sell some positions.  If the down trend continues, the available cash can be easily deployed to add to positions at lower prices.

Bottom Line

First, make sure you have a strategy.  Once you do, stick to it even when your emotions are fighting it.  It’ll pay off in the long run.  Good luck everyone!

Comments are closed.