Investing 102

[GregWeld]

Originally Posted by SSLance

I'm in a bit of a quandary here... I have 11 holdings (12 if you count cash). Each of my 11 are currently valued at around 5% of my total except for 3 which are 2.5-3% of my total. As you can imagine, those 3 are oil related stocks.

So while looking to step in the market a bit more today, and balance the portfolio out...numbers say to pick up more of those 3 stocks.

Should I pay more attention to balancing my holdings back out...or add to those stocks that haven't got as beat up as the others? I still like and am holding XOM, ETP and KMI, I'm just not as enamored with them to keep on adding to them as much as I have already done during this slide.

I'm leaning toward adding 1% to the other 8 winners instead.

A very common dilemma!!! Most tend to want to pile into the winners... and loathe putting more money into "bad" investments (the losers). What I want to do is what feels right at the time.... and what my thinking is about how long the losers are going to maybe be losers... and whether or not they're going to be down long enough for me to put money in later rather than be "early" and have 'em sit and be sad sacks.

Right now the market is just a disaster - which is a good opportunity to buy some things at LOWER PRICES than they've been at. Lower prices does NOT mean they're at their lows... they're just lower than where they were or have been.

So -- do what you feel right about... and give some thought to what your time frame is for when you think the losers might begin some recovery. If they're oil related - my sense is you have a year or so maybe less... So there's plenty of time to wait on the side until you have confirmation these are coming back. If they're just market losers because the whole market is down - then those should come back when the market turns back.

You also may want to look at this in another way -- i.e., look at what percentage each name is down -- and then see which name(s) could be invested in to average your yield up and your cost down.... so maybe it's only 2 or 3 names that are down just a few percentage points - and buying more shares of them would raise your yield half or more points.