Stock Portfolio Management: Without It Losses Are Inevitable
Stock Portfolio Management & Other Trading Ideas

Stock Portfolio Management & Other Trading Ideas

Stock Portfolio Management: Without It Losses Are Inevitable

It All Starts With  Good Stock Portfolio Management

Without a good plan, you are bound to lose:

These suggestions are meant to serve as guidelines for improving their trading skills. As your skills improve, you should be able to modify/replace some of these suggestions with ones that suit your trading needs.

Taking profits off the table from time to time.  To do this in a non-emotional manner. Select a profit target for at least 33% of your position; generally, 50% is better, but 1/3rd is a good starting point.  Choose a specific profit target ranging from 20% upwards and stick to it through thick and thin. If you choose 40%,  and your stock shows gains of 40% or more, 33% of the position should be closed automatically.

Next, always have some money at hand for those mouth-watering opportunities with a habit of showing up when you least expect them. Conservative players should have at least 25% in cash when the markets are trading in slightly overbought ranges on the monthly charts. Slightly overbought means Technical indicators such as MACDs, stochastics, RSI, etc., are trading in the slightly overbought ranges on the monthly charts. At that point, conservative investors should start building their cash position until it accounts for approximately 25% of their holdings.

 

  1. Divide your money into equal lots and deploy the same amount of money into each position. Always maintain some cash for potential Mouth-watering opportunities.
  2. When markets are in the overbought ranges, low to medium-risk investors should build up a cash position that represents 15%- 25% of their portfolio.
  3. Determine profit targets for at least 33% of any given position (preferably 50%) and do not deviate from this target.
  4. Determine how much you are willing to lose and set stop losses at 20-30%, with an average of 25%.
  5. Exit the position when your stop loss is hit, do not adjust the stop hoping for a recovery.
  6. If a play is not working out, make a decision to stay in or sell and invest in something else.
  7. Set realistic goals, and do not get into options until you understand the market well. The only exception to this is selling cash-secured puts and covered calls.

Portfolio Management is discussed in more detail here.

Commercial News

News can be seen as mostly useless because it is often outdated when it is released to the public. Additionally, many people have access to the same information, making it difficult to gain an edge. However, it can be useful if one can look beyond the surface level of the news and analyze the underlying story. Additionally, commercial news sources can provide information on what actions to avoid and the market sentiment, which can indicate market tops and bottoms.

Fundamental Analysis 

Stock portfolio management suggestions Using fundamentals alone in trading may not provide a significant edge, as the information is widely available and often leads to similar conclusions among investors. However, combining fundamentals with technical analysis and understanding mass psychology can improve the trading experience. Additionally, a well-structured portfolio management plan is crucial for success in the long run. This includes diversifying investments and setting clear risk management strategies.

Indeed, if everyone draws the same conclusion from the information available, it can lead to a lack of an edge in the market.  History clearly demonstrates that the masses are never on the winning side.  Over the ages, a brilliant and wise man (Mr Spinoza) drew the same conclusion.

Peter Spinoza has some sage words for newbies.

Paraphrasing the wise Philosopher Spinoza born in 1634, “those that try to show others the light are usually sorely in need of this light” or as Johann Wolfgang von Goethe born in 1740 who had the following to say. “I find more and more that it is well to be on the side of the minority since it is always intelligent”.  Or William Stanley Jevons born in 1853 “ As a general rule, it is foolish to do just what other people are doing because there are almost sure to be too many people doing the same thing.”

Technical analysis

This is the only area that can provide an edge if appropriately implemented. As more and more individuals start to embrace it, the moves are becoming more extreme. New users get fooled when a stock overshoot’s its mark on the upside and or downside.  The settings need to be adjusted or tweaked, as standard settings will usually offer you no edge.

Adjusting the settings will help give you an edge over those who utilise the standard settings. The main area of recalibration is the mind. One now must understand that markets will overshoot their targets to the upside and downside due to increased volatility.  Accept this and do not fight it; we have coined a saying to deal with this phenomenon. Adapt or die; there is no in-between when it comes to trading. Also, understand why most mechanical systems fail by reading this article. 

Effective stock portfolio management can make the difference between winning and losing.

Mass Psychology

Stock portfolio management essential to success

This is probably one of the most powerful tools one can employ in the market, but it is also one of the most misunderstood and least utilised tools.  If you understand how to utilise this tool, you will have an enormous edge over most market participants.  It is the only tool that pushes the mind to focus on inductive thinking as opposed to deductive thinking. Deductive thinking is where you are given a particular bunch of facts, and you use these facts to come up with a possible outcome. However, what if the facts presented to you are faulty or, worse yet, fake? Then, no matter how thorough your analysis, the result will be flawed.

Inductive Thinking is both overlooked and under-appreciated

Inductive thinking involves using a higher part of the mind.  Here you search for the facts and then use these facts that you obtained from your observations to draw a conclusion and determine a possible outcome.  Inductive thinking is 100 times superior to deductive thinking. Very few can understand this process, let alone use it effectively.

This failure is because most market participants are trained to believe that they have to work very hard and spend endless time learning rubbish published in stock trading books to improve their skills.  The focus should be on observing what is going on and keeping a trading journal during trying times. The best time to keep a trading journal is during a market crash.  You will be amazed at the data you can glean from your notes months and years later.

The general concept of investing t can be summarised as follows; you should be very nervous when everyone is happy and vice versa.  Once you understand this, you can then work on fine-tuning your understanding of this potent and invaluable tool.  We can assist this arena because mass psychology is integral to our analysis.

What we focus on at the Tactical Investor

stock market timing

Our focus is on the behavioural patterns of the average person (mass mindset). The mass mindset interests us, for therein lies one of the most powerful secrets to becoming a truly successful investor. We would like to take the time to remind everyone that before one could walk or run, one had to learn to crawl; before one could crawl, one had to want to crawl. Thus if you seek to change, you must first want this and then understand that change is not something that comes about without some effort. The effort is necessary because one has to deprogram one’s mind from old concepts that one was falsely led to believe.

Mainstream media focuses on Brainwashing instead of educating.

Your mind has been trained for decades to accept what the mainstream, the popular press and so-called experts deemed true. Here at TI, we view no one as an expert (this includes us); we are not in awe of any being on this planet, nor shall we be in awe of anyone who claims to know it all. We do, however, respect the giants from the past and a few from the present who go out of their way to state that they don’t know much but are open and willing to learn as much as possible. Idiots are forever clamouring for attention while the wise desperately seek to avoid it, for they know their efforts are best directed towards seeking more knowledge rather than wasting time basking in the light of false glory.

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