I use days like today to check all my stocks (not that many really - no need to have a zillion -- just good ones!) and anything where my 5% rule is lagging -- I look to add to those positions not sell... I look to buy when the others are selling.
Schwab has a tab in the Positions page - where you can check your "unrealized gains/losses" --- This is the page I go to on days like today. I look at the red numbers first - because these are stocks I've done all the research on - and I only bought them because I want to own them - perhaps they're red/down at the moment - but I certainly don't expect them to stay that way over time.... and I pick away (add to the position) on days like today. That usually (short term) adds to my loss... but I don't care about that --- I'm SCALING IN. I never buy an entire position at once. Some of you can't scale in -- so this is info for when you do get to that place... So this post is just about how I personally use a down market day.
Today I added 5000 shares to my Banco Santander (STD) holdings. I have now made 4 separate 5000 share purchases... and I have a "loss" (paper only) in the name. They pay a very handsome dividend and I expect this world bank to be just fine 3 or 5 years from now. In the meantime - they're paying me to sit on my hands.
The name is still a low holding in my Schwab account... and I don't expect to get to 5% in this name because of the share price -- I'd simply have to own too many shares to get to what constitutes 5% of my investable assets. So there's another INVESTING 102 lesson. You don't have to have any particular number in any particular name. The 5% "rule" is about THE MAXIMUM - but it doesn't mean you ever have to get there.
So here's another thing to pay attention to and I've written about this before -- it's what I call the "LAW OF LARGE NUMBERS". This is true regardless of how much you're investing!
10 shares down $1 ='s 10 dollars
100 shares down .35 ='s 35 dollars
Doesn't make any difference that the 10 shares are @ $500 each and the 100 shares are only $5
So as you can see -- the one stock that you have the most shares of can really "counter" your other stocks. The more shares you own - the more affect they can have on your performance -- and this is true whether they're going UP or DOWN!
I try to be cognizant of this when looking at my accounts. Sometimes you're surprised at the gain or loss of a particular holding -- and then you have to look at the number of shares you're holding rather than the actual dollars invested. And that's when you'll see this "law of large numbers" take affect.
Today's market is hardly "scary" and you shouldn't be scared by a market that is down 1 or 2%... I'm always HAPPY for days like this because it allows me to add to my positions. It's like going to Nordstrom and finding a pair of shoes you've been wanting to replace - on sale!
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