2019 Is The Year For Stocks Portfolio Balancing

2019 another Yo-Yo prediction year.

2017 was a wonderful year for stock picking investing. However, 2018 ended with a bad taste in our mouth with most portfolio in deficit zones. No one can forecast  2019 or years forward, not even Warren Buffett or any well-known successful investors.

From the current news, many feels that the next major recession is just around the corner and investors should always prepare for the worse. 

Should I stock pick for 2019?

The short answer is NO! For long term stock investors, I am not looking for the next big blockbuster stock. Simply because all the good stocks are over-valued. Under-valued shares have their uncertainty, they are low for a very good reason.

3-Key Steps of Portfolio balancing

a. Cash is limited but still King
Cash is essential for emergency rainy day funds and we never know when we need them. Very important to know we have access to them when we need it and not locked in Stocks investments at the wrong time.
We can save and update our budget to boost our savings. It is highly recommended to keep savings segregated between emergency cash and investable cash. This way you know how much you can afford to lose.
Remember to top it up. Our 9-5 jobs are not to expect a major pay rise anytime soon. I would be looking to offload unwanted bills, sell unwanted things at home and side hustle for more income.  Check out my Side Hustle Post for ideas.
b. Take the Loss or Profit
Never be loyal to a stock or company. I am a long term investor of Apple and Amazon stocks. These companies will not refund you if their companies decline. Business is Business and if you lose money in stock investment you are the person to blame.
If you are still in profit, but not at the level of 2017, hoping for recovery in 2019 then this is a bad strategy. Example: I missed the chance of selling Apple at $220 in 2018 and now trading at $170. I sold 30% of my stake so I have cash in hand to buy other more favourable index like Japan or Emerging Asia.
C. Balance your portfolio with Index or Global Funds
My fundamental principle is to own at least $10-20k worth of index before venturing into stocks and shares. Deviating from this rule is great during a bull market and painful during a bad bear recession.

Index from majority stock exchange like Japan, US, UK, EU are very defensive compared to defensive non-cyclical stocks. 

The only funds I would recommend getting are global non-cyclical type funds. Make sure that low-cost of under 0.8% management fees is critical to ensure manager fund fees do not overshadow your profits. Remember these BASTARDS take fees even when you are making losses.

Balance, Balance Balance

It is fundamentally important to ensure you build a balance portfolio. Your index and global funds should be the highest holdings in any self-invested portfolio. If your current portfolio is not, then do correct it now.

Self-Investment portfolio is all about managing the risk and not maximising profits.

Why Not Bonds?

Best time to buy bonds is when interest rates are yielding better than stocks. This is when money are all shuffled into fixed income making bond yield less favourable and its time to buy bonds. If there was a crash in the economy, causing bond yields to be favourable, provoking liquid assets to move into bonds which should move the value of bonds higher. 
For Now, bonds are not ready to be bought yet.

Final Words

Stocks and Shares investments is about managing your risk. Never focus on the potential rise or bounce back. Always be cautious about your portfolio balancing to allow it to be autonomous with minimal care and maintenance. 2019 should be a year for you to focus and rebalance it.
 

Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.