As we all know, the markets have been on an absolute tear lately. That said, I am finding more and more of my “non-investor” friends paying more attention to their stock portfolios.
This begs the question:
Do you review your portfolio more often when the markets are performing well?
If you do, you are definitely not alone. It is no secret that people are fascinated by the almighty dollar. So much so that they find the time to calculate their gains when the market is good, but pay less attention when markets suffer.
Why not make attending to your portfolio a habit?
The majority of us buy-and-hold investors could probably get by with reviewing our portfolios on a monthly basis. Some would suggest that quarterly is sufficient for those who invest primarily in large blue-chip stocks.
The point is that reviewing your finances is just as important as some of the other regular habits you might have such as changing the oil in your car. I think that we can agree that neglecting your retirement portfolio could impact on your future just as much as missing an oil change!
How do I review my portfolio?
A simple way to review your portfolio is to ask a few simple questions about your holdings in order to determine if they require further investigation…that is to say the position should be sold out, trimmed, or added to.
Here are a few of the questions that I ask myself when reviewing my holdings:
- Have the fundamentals of the company changed? If so, what is the impact?
- What, if any, news has surrounded the company in the past month and what has been the impact on the stock price?
- Has the company decreased or increased its dividend?
- Did the latest earnings report result in increased shareholder yield?
These are basic examples of questions that I ask myself about my holdings to determine if any further investigation needs to be made. In addition to these questions, I look at the stock’s yearly chart to determine if any drastic changes have been made in the prevailing trend.
I actually believe that it is more important to pay attention to your portfolio in times when the market is struggling.
If the broader market falls it might trigger a buying opportunity if one of your stocks has improving fundamentals but the share price has been pulled down by the overall market movement.