By Open Studio @ Adobe Stock
“I’m good at buying stocks but bad at selling,” says everyone. It’s why Your Survival Guy doesn’t like to speculate in the stock market. I much prefer the life of an investor, like a gardener, tending to my investments rather than cutting and hacking away at them. Having a finger on one’s risk tolerance is a good place to start that way of life.
But like a lot of life lessons, the difference between an investor and a speculator is taught best in the school of hard knocks. Everyone thinks they’re an investor when prices are up. It’s the keen-eyed investor who sees opportunities when they’re down. What did everyone think stocks do, go straight up forever?
Your Survival Guy uses Ben Graham’s lessons in The Intelligent Investor to define the investor and the proper allocation model of 75-25, stocks-bonds, or somewhere in between. In my conversations with you, a 50-50 mix is a good place to start the discussion. “Oh, that’s too simple, Survival Guy,” you think.
“You will live a life of peace and comfort within 75-25” sounds like something you’d read on a fortune cookie, glance at, and then discard. And yet, it’s something to be studied and guided by.
When you have your life’s savings in a handful of stocks, hoping and wishing they get to a certain level so you can live the good life, you’re setting yourself up for possible disappointment. Remember, for every Bull Market, there’s a Bear hiding around the corner, waiting to rip it to shreds. Doesn’t happen often, but it’s a killer when it does.
Action Line: The pain of losses far outweighs the euphoria of gains. Live your life with peace of mind and comfort with a portfolio risk tolerance that matches you. Too often, investors realize after the fact that, like a food allergy, their tolerance was an intolerance. Email me at ejsmith@yoursurvivalguy.com.
Originally posted on Your Survival Guy.
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