Reassessing your investment portfolio

"The main complaint of new clients about their previous financial planner or broker is that they felt no one was really watching their portfolio. They'd be good at buying but there would be no real strategy to get out. Many times they rode specific investments up, the market would correct and they'd ride it back down. It's one of the most frustrating investment experiences you can have. It might even be more stressful than losing it from the beginning because when you have tremendous gains and you watch them wither away it's really difficult to take."

Lancz says he learned early on about the discipline of setting up target price ranges so you have an idea of when to get out of an investment. As a stock price is rising it's easy to let greed rule your decisions. The stock price falls and you let yourself think it's a great investment the drop is temporary. Next thing you know the stock has lost serious ground. Lancz stresses the importance of protecting yourself on the downside, as well when a stock tanks shortly after you buy it.

"We don't usually get involved in an investment unless we see three to four times the reward potential as the risk. So, if we're buying something at $20 and we think it's worth $35 we want to make sure that we don't see it going lower than $15 or $16. We're taking a 20 percent or 25 percent potential risk for the potential of making three to four times that on the upside."

There are many who will argue that the "buy and hold" philosophy of investing is dead thanks to market manipulation, day traders, hedge funds, and the like. You don't have to throw in the towel but you do need to be proactive and set aside time to monitor your investments. If you decide to hire a financial adviser be sure that he or she has a plan to protect your portfolio.


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