PORTFOLIO WISDOM: USE DAYS LIKE TODAY AS A TOOL
A tool to gauge how much your portfolio has the potential to beat you down if things continue going down the bearish path.
If you underperformed the market today. Meaning that your portfolio was down in excess of 3%, then you need to consider trimming exposure beginning with the weakest positions.
If you outperformed the market today. Meaning that your portfolio was down less than 2%, then you can leave things alone.
The beauty of investing in micro-cap and small-cap stocks that are undergoing some level of restructuring is that they don't correlate to the market averages unless all hell breaks loose. Between 8 positions in the portfolio and a 100% net long exposure, the portfolios finished the day down about one-quarter of one percent. Nothing that I'll lose sleep over.
If your portfolio was screaming out in pain today, then you should listen and take some of the weight off its back. It's really that simple. Yes, really.
