When designing a long-term stock portfolio, many people focus on stocks earning lucrative returns while neglecting the presence of losing stocks in their portfolio. Are you torn between keeping the losing W investments and selling them as soon as possible? Here's what you need to do to make the best of your portfolio in the long run.
Defining Losing Stocks
You may have a few stocks in your portfolio that are down 5 per cent, 7 per cent, 10 per cent, 15 per cent, 30 per cent, 50 per cent, or even more. It does not, however, mean that all of these are losing stocks. So, who are the losers? Losing stocks are ones in which the stock price has dropped significantly and you cannot recoup even 20 per cent to 30 per cent of your initial investment. Such failing stocks continue to perform terribly, and you lose money in the stock market as a result.
Tips to Reduce Losses in Stock Market
■ As part of your investment strategy, maintain your stop loss discipline.
■ Excessive trading does not result in increased profits. So, don't overdo it.
Determine your risk tolerance and invest in stocks accordingly. Avoid investing in small-cap companies if you are a risk-averse investor.
■ Never maintain a losing stock for a prolonged period of time, since this will not only exacerbate the loss but will also prevent you from investing elsewhere.
■ Avoid bottom fishing since it is difficult to foresee market peaks and bottoms.
Types of Losses
Losing money is an unavoidable element of investing in the stock market. However, there are other types of losses that can occur while investing in the stock market. These losses are discussed in the forthcoming paragraphs.
Loss of Capital -
هذه القصة مأخوذة من طبعة November 07, 2022 من Dalal Street Investment Journal.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك ? تسجيل الدخول
هذه القصة مأخوذة من طبعة November 07, 2022 من Dalal Street Investment Journal.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 9,000 مجلة وصحيفة.
بالفعل مشترك? تسجيل الدخول
How To Invest In An Ageing Bull Market
Bull rallies (periods when stock prices rise) and bear declines (periods when stock prices fall) are natural parts of stock market cycles, but they don't follow a fixed timeline.
Should You Entrust All Your Money To A Single AMC?
If you are a market participant, you have probably heard the quote 'don't put all your eggs in one basket', which suggests diversification. Investors often focus on diversifying across categories like large-cap, mid-cap and small-cap, but they may unintentionally overlook diversification across different AMCs. The question arises: is AMC-wise diversification really necessary? Rakesh Deshmukh takes a closer look at this scenario
Wild Swings Engulf Global Equities
U.S. stock markets experienced significant volatility. An early-week rally pushed the markets to new highs, but this momentum faded, primarily due to weaknesses in the tech sector. The major indices had a mixed finish with, S&P 500 and Nasdaq closed lower, while the Dow recorded a notable gain.
U.S. Elections and China's Economy Hamper Commodities
Commodity markets experienced selling pressure in the last fortnight, driven by uncertainties surrounding the upcoming U.S. presidential elections, concerns about the Chinese economy, and increased agricultural production in Brazil.
Wealth Building For Retirement Through Mutual Funds
Retirement is one of the most crucial and lifechanging phases. It marks a period where maintaining your lifestyle becomes paramount even though your regular income stops.
Mastering Investment with Information Ratio
Information Ratio helps in navigating the complexities of the investment landscape by assessing an active fund manager's performance. And though it has its limitations, it remains an essential part of the finance industry. The article explains what Information Ratio is and how investors can use it as another tool
Plan To Be Financially Independent
Each of us aspires to be financially independent as it ensures having enough resources to be self-sufficient and control our finances.
❝Technology is the new game-changer"
With a new breed of young investors entering the financial markets, it is the use of technology that is increasingly playing a major role in how investments are done and tracked. Anand Radhakrishnan, Managing Director, Sundaram Mutual Fund, shares his opinion about how this factor is turning into a significant tool and how it will shape the strategies of his company
What If Donald Trumps?
The potential election of Donald Trump as president in the U.S. carries significant implications for the Indian equity market. It could lead to changes in the global trade dynamics, in particular affecting the Indian IT sector while also raising inflation levels and leading to yet another revision in the visa programme for Indians who want to work in the US. The article takes a closer look at what may lie in store
Sectoral Gains Make A Mark
Benchmark indices continued their uptrend, reaching new record highs, although the pace has slowed as the broader markets faced selling pressures
