One thing I struggled with early on when I started investing (and still do occasionally) is the need to do something with my portfolio. Without doubt, one of the main reasons investors produce poor performance over time is due to over-trading, the burning desire to buy and sell positions. Not only do you lose the opportunity for gain, you also eat up your money in fees.
But the more experienced I become, the easier this becomes to manage. It doesn’t feel natural though, does it? Everything these days feels short-term and mile-a-minute paced. It’s almost impossible to avoid market and/or company news. There’s always something going on somewhere. Add to this you have people’s resounding image of stock markets as a stereotypical trading floor like this:
Are these guys long-term buy and hold? Not a chance! They will make dozens, if not hundreds of trades a day, holding zero positions at the ring of each closing bell, ready to begin it all again tomorrow.
I don’t know about you, but to me that sounds exhausting. I’m much more comfortable doing the hard work initially to identify a suitable investment, and then letting time work in my favour. In doing so I also keep my trading costs to a minimum.
So what advice can I give to someone struggling with the urge to trade? Define your own reasons to sell.
Continue reading “Four Reasons to Sell a Position”