Shares and nerves

[AMR]

While operating a buy-and-hold strategy, how do you cope with your shares dropping in value? Having only started buying shares recently I'm finding myself drawn to checking the stocks (and these boards) every couple of hours to see whether they've recovered.

[Halebop]

Google vicodin and valium. Suggest the other "v" of viagra would be a prescription error.

...operating a buy and hold strategy and checking in on the market every couple of hours is probably asking for trouble. I'm not sure I'd resist the urge to tinker. In my case, I trade over short to medium term time frames (days to years) and invest for long term although I haven't done much of the later in the last few years. Having something to do can be my downfall so I decided to actively trade a (usually) small percentage of my portfolio in order to destract me from doing something dumb with the lions share.

Funny thing is that when I'm away from the market for any length of time (as a participant or a spectator) I don't really miss it.

[mothership]

I am sure there is a syndrome for those of us who obsessively watch the stocks and the boards - I suspect the solution is getting a life
disc: waste way too much time on forums and watching stocks, but anything is better than housework[xx(]

[Lizard]

Keep some cash handy. That way I can salivate over the bargain prices emerging and spend the time drawing up downside price targets and deciding which way to spread my cash.

If I get caught with insufficient cash going into a downturn, I usually pick a couple of victim stocks to sacrifice as soon as the action becomes apparent. (Bearing in mind that I typically hold 30+ stocks at any time).

[shasta]

Shares dropping in value?

In a raging bull resource market over the ditch , with the $NZ/AUS over 90 cents on the exchange?

Where have you been?

If you find yourself having to watch the market with that level of anxiousness, then perhaps you should be paper trading until you feel more confident.

If/when the market turns bear there will be more days like today where companies will fall for no fundamental reason other than the market in general.

There is alot of good advice on Sharetrader - so do avail yourself to the best "free" source of info around, especially the investment thread.

Good luck

[Phaedrus]

How do you cope with your shares dropping in value While operating a buy-and-hold strategy?

There are many tried and true methods. You can see them all being demonstrated right here on ST.

(1) Tell yourself lies such as "I haven't made any loss until I sell". (No selling = no loss. Neat!)
(2) Affirm to yourself and others that you are a longterm investor in for the long haul. Market fluctuations do not concern you at all. In fact, you are not even interested in discussing such trivia.
(3) Rework all the fundamental calculations on which you based your stock selections. You will find that they will look better than ever as the market weakens. See this as vindication of your choices. If you thought they were worth buying before, they now represent even better value.
(4) Convince yourself that "Mr Market" is a manic-depressive fool. You are right and the market is wrong. Without question. This is a very important point and it is imperative that you have total confidence in your abilities. You must be convinced that there is no chance whatsoever that you got it wrong. This is no time for self doubt.
(5) Ask yourself "What would Buffett do?" It's irrelevant and you don't know, but ask anyway!
(6) Buy more. See the general market weakness as a wonderful opportunity to "Top-up" your holdings. This is a good word to use because it avoids the negative connotations of "averaging down". Pretend that you actually like it when these things happen. Be brave when others are fearful and show your confidence by buying more.
(7) Concentrate on dividends. These are real money while capital losses are illusory. As the market weakens, continually recalculate the dividend yield of the stocks you are holding. It is very gratifying to see these figures rising so nicely. Think of yourself as being cool, calculated and reasonable. Refer to worriers as "headless chickens". You will know that you have become a mature exponent of this approach when you can say something like "I don't care what the SP drops to so long as they keep paying the dividends."
(8) Think of all the brokerage you would have to pay if you were to ever sell any of your stocks. Concentrate on minimising this sort of unnecessary expense.
(9) Remind yourself frequently that you are an investor and NOT a trader. Traders are undisciplined rabble and beneath contempt. Remember, there is no middle path. This is an important point - you must choose one or the other. There can be no compromise here.
(10) Think about the possibility of your being assessed as a trader by the IRD. Think about the horror of having to pay tax on your capital gains. You don't want these things to happen - right? The only way to safeguard yourself is to never sell anything. Ever. Keep telling yourself you are a longterm investor with a buy and hold strategy. This must become your mantra. Use it to drown out any negative thoughts.

It is easy and profitable to be a "buy and hold" advocate when stocks are going up nicely. Unfortunately there are times when it is difficult and unprofitable. To resolutely hold in the face of a falling market takes a certain type of person. Maybe, just maybe, you are not one of them. This is nothing to be ashamed of. You are not alone.

[Lizard]

While I enjoy your ironic humour Phaedrus, it would seem to me that a person who is struggling to handle their emotional reactions while operating a buy and hold strategy is going to suffer 10 times more under a shorter term method.

Trading correctly relies on being able to follow a good trading plan with discipline and not being diverted by fear and greed. Getting to that point would seem to require some years of experience to enable the plan to be proven and trusted. In the meantime, each trade carries a burden of doubt. More trades -> more doubt -> less constructive decision-making -> more losses -> more doubt....

[duncan macgregor]

PHAEDRUS, Before you rubbish what others may or may not have done, come out with what you did then we might compare. I myself am sitting out the market with my trading account waiting on the bargains. Just finished a reshuffle of my investor account to a wider safer range of companies. We cant all sell if the stop loss gets hit, who would buy if we all had similar systems. I am seriously thinking of being a full time trader myself, giving up the idea of having an investor account for reasons you mentioned. You keep your cards pretty close to your chest, come out and say what you do at the time, not jump in after the event to bark at the sheep. Why is it you never disclose any companies you hold like poor old SNOOPY for instance the one guy that should keep quiet about his companies. It takes all types to make a world thank god for those buy and hold investors we really depend on them when we sell at the top. Macdunk

[SEC]

quote:Originally posted by Halebop

Funny thing is that when I'm away from the market for any length of time (as a participant or a spectator) I don't really miss it.

Same here. Although it helps if you're sitting on several stocks that have gained 200+% so even a major correction doesn't significantly affect your gains. But to get a portfolio like that generally takes years. The bigger the gains, the less I worry. I was recently away for several weeks in Europe and may have looked at my portfolio once a week during that time. I needn't have bothered, the portfolio went up anyway.

When I was a novice I exhibited the same behaviour as Mr XXXX, watching those small gains obtained over a few months disappear in a week. The only cure for that is MORE TIME IN THE MARKET.

SEC

[living2]

UNCERTAINTY= OPORTUNITY if you can prepare your portfolio for itisclaimer:have held GPG since it was first floated and topped up during any weakness.There are many posters who are now indicating GPG would be now sold out of their portfolio.Maybe they are right /wrong only time will tell.Looking back an initial investment in GPG is now over 10 times initial investment,since 2001 up only 2 1/2 times.This is my example how time in the market helps if you can pick a stock that is going to be around for the long term without having to worry if your investment is going to go down the gurgler.