FAST FIVE: "This Is Nuts!", Part Deux
“This Is Nuts!”, Part Deux Authored by Lance Roberts via RealInvestmentAdvice.com, In this past weekend's newsletter, we discussed the exceedingly deviated price, and overbought conditions, not to mention valuations, as key reasons why we slightly reduced risk in our portfolios.
It gives us capital to reinvest back into positions we currently own at better prices; or, Buy new positions which have corrected in price.
Rebalance by reducing losers and adding to winners.) “Buy” and “Sell” signals are only useful if they are implemented. (Managing a portfolio without a “buy/sell” discipline is designed to fail.) Strive to be a .700 “at bat” player. (No strategy works 100% of the time.
However, being consistent, controlling errors, and capitalizing on opportunity is what wins games.) Manage risk and volatility. (Controlling the variables that lead to investment mistakes is what generates returns as a byproduct.) The current market advance both looks, and feels, like the last leg of a market “melt up” as we previously witnessed at the end of 1999.
This is why focusing on “risk controls” in the short-term, and avoiding subsequent major draw-downs, the long-term returns tend to take care of themselves.