What should I do when my portfolio is up 75%?

The Question

“Hi Mr. Germo, I’m excited that you are coming back to Singapore this month!  I’m excited to hear you for the first time, your books and videos have helped me a lot in select good quality stocks and I now have 75% gain just for the year! Thank you so much sir!  My question is this, now that the market is up, what should I do?  This is my first time to experience this much gain.  I am tempted to sell.  Please help me.”

Ryan B., OFW, Singapore

I am glad that the books and the videos are helping you a lot in your investing.  I am also glad that you are earning good and well in the stock market.  I wish more Filipinos would be like you that we get to change the status quo of investing here in the country.  As it is my hearts desire to help every Filipino to earn and invest the right way.  I am also glad that we are seeing a new trend of Filipinos overseas learning the rudiments of investing.  That is why I will never stop doing what I do until we have more Filipinos financially free and pushing their money to work hard for them.

My experience

Experiencing market movements like this is such an amazing feeling!  I can still vividly recall the 2009 market start to reverse after it got battered down by the 2008 financial crisis.  It was such an wonderful sight to see stocks that I positioned earlier on to start moving in an upward direction.  I was still employed at that time and I couldn’t help but just refresh my computer repeatedly wanting to see how high my stocks went!  (Admit it, some of you did that to today!)

An Amazing Feeling

Though its an amazing feeling to see your stocks go up rapidly (I am sure that by now you are happy that you have seen the fruits of your positioning pay off). I would like to give you a word of caution though  to try to back off a bit right now.  What do I mean by that? Sometimes when the market is high we tend to let our emotions take the driver’s seat!  Its either the greed of wanting to earn more and us buying stocks at higher levels or the fear of not wanting to lose any of the gains that we sell to quickly and don’t maximise our gains.

This has happened to me so many times in the past before.  That’s why I urge to keep a step back so that logic still takes the lead over emotions.

What should you do now?

1.  Stick to your trading plan

My suggestion is for you to go back to the reasons why you bought the stocks that you own.  Were those for fundamental reasons?  If so, you must ask yourself, is there anything that has changed in the fundamentals of the company that should cause you to sell?  If there is none, why not just maximise your gains further!  Or are you looking at valuation ratios, is it telling you that it is expensive already?  If so, check what parameter did you use as your indicator to actually sell.  If it hasn’t changed then don’t do anything.  If that parameter is telling you its expensive already, then sell.

I personally am a fan of charting and technical analysis, I would sell when the charts tell me to sell and I would buy when the charts tell me to buy.  I don’t mind holding on to a stock for a very long time as long as my charts tell me there is no sell signal.

For me its, technical analysis, what’s yours?  You need to build a strategy that fits you.

2.  Stick to your financial plan

As an investor, your goal is to stay invested until you have hit your goal.  My question is this, from where you are now, have you already hit your goal?  If you have not yet, why should you actually take out money in the market or even from your equity fund?  Stay invested until your assets carry the weight for you and you can be financially free!  I have personally seen a lot of people earn a lot on their stocks and equity funds only to remove and spend it all bringing them back to square one.

Personally, I plan to stay in the market up until I am 90 plus years old.  The longer you are invested the better it will be for you.

3.  Enjoy the ride

As you are are already positioned well, just hold and let the market move with the trend.  The market is bullish and it will continue to be bullish until proven otherwise (until technical indicators say so).  As of this point we have no sell signals yet!  If the market holds out and stays above 7,700 the next price for the PSEI would be at 8,100! What a great time to be an investor!

4.  Do not fall in love with your stock

One of the biggest mistakes of investors during a  bull market is they fall in love their stock and never let go. Don’t do this.  When your technicals/fundamentals tell you to sell, you must sell.  You can always buy them back again later on when buy signals emerge again!

I hope this helps you Ryan in your trades!  See you in a few days for Stock Smarts Singapore!  If you guys also have any questions, feel free to message me via this link or via my facebook page and I’ll be glad to answer you!

New book and other books on Investing, Business and Finance.

I’m excited to share my 5th book overall and the 4th book in the Stock Smarts series, Stock Smarts: Breaking the Resistance – How to time your traders perfectly. The heart of this book is to teach you strategic ways on how to come in and buy and sell stocks in a way where you come as the market is headed up and come out as the market is headed down. The book is now out and exclusive via Marvin Germo Book Orders.

For more details and to order my other books: Marvin Germo Book Orders

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