We have to start dealing with the pandemic situation in a better way, and we need to start practicing prudence and patience; because the problem is not going to get easier with time. As has been suggested by NASDAQ: ACT, we have to stay optimistic until we figure out a way to boom again.
Focus, and move towards the efficient way
Especially, when people who are known for predicting bubbles starts talking about the one-sided optimism, that is a signal to rethink our cash strategy and cull risk from our portfolio. First, if we are in or near retirement, we should check our cash savings and decide if the balance is enough to cover our needs for the next five to seven years. Should a market downturn happen, sufficient cash on hand helps us avoid liquidating when our positions are down.
Always ensure the performance is best.
- Then, we should verify that we are comfortable with the risk in our portfolio. If not, reduce speculative positions in favor of mature, reliable companies with proven track records of powering through recessions and bear markets.
- Consumer staples and mass grocery retailers generally fit that profile. We should be aware of the stuff according to the NASDAQ: ACT at https://www.webull.com/quote/nasdaq-act, and if we are not a stock-picker; and
- We should beef up our ownership of low-cost, broad market index funds. That’s an easy path to diversification that provides near-market performance.
Understand the benefit over the professionals
Fund managers are under enormous pressure to create results. That pressure encourages riskier behaviors like frequent trading, speculative buying, and chasing trendy stocks and sectors. As a nonprofessional trader, we are only accountable to ourselves. If we want to build a diversified portfolio and sit in the same positions for 30 years, we can do that. If we want to do nothing when the market goes sideways, we can do that, too. No one will ask us to justify that decision, except possibly our spouse.
Work like a smart person
According to smart people, that independence is a luxury and an advantage. We should not waste it by over-trading, reacting to short-term market conditions, or going all-in on the stock our neighbor recommended.
Change the strategy to minimize risk.
Thus, we should always remember diversification. It minimizes volatility, protects our capital, and gives us multiple pathways to achieve growth and earnings. We can keep our portfolio broad, with exposure to multiple asset types, industries, and even countries. We can do that by holding 20 or more individual positions, or by building a portfolio with a handful of mutual funds that each have a unique investment approach as suggested by NASDAQ: ACT. If you want to know how to buy stocks online, you can check at some online stock trading sites. Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.