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Summary
- There should be a periodic review of investments, it can be a fortnight, or a quarter
- A daily eye on stocks, or active watch on the portfolio is not actually required
- You may have to look at investment in unforeseen situations to contain the losses
Reviewing your investment after certain periodic intervals is always advisable. But, should you be worried about the investments everyday? individuals who have made the investment with a long-term perspective should only consider examining and reviewing the portfolio after a fortnight, a month or a quarter.
There are several reasons that make no sense to review your investment portfolio on a daily basis. Most of the disciplined investors follow a strict strategy in terms of expected return, the time period for which the investment has been made and the anticipated risks that can be adequately absorbed by them.
The daily fluctuations and deviations in the indicative price of assets only create a noise, following which a large section of new-age investors fall into the prey of offloading the assets in order to avoid further losses, if the prices slide below the average buying cost. Sometimes, the people are tempted to sell the stocks with a marginal gain, much before the pre-decided holding period.
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Checking the stocks on a daily basis only develops a feeling of anxiousness as the share prices of the companies typically move in other directions that it was anticipated at the time of investment. Setting up alerts at different levels in the value of the portfolio can certainly help you in a timely review of assets.
However, there are no set patterns that can guarantee an optimal review as the stock markets continue to remain volatile, be it a crisis situation or a so-called normal market functioning.
When should you check your portfolio?
- If there is a considerable gain in the prices of the assets in a very quick succession, then there may be a possibility that the stock can break out the pre-estimated resistance level and you can be poised to recognise sharp gains in the upcoming period. In such instances, you can consider adding further position in order to maximise the ultimate gain, or you can realise partial profits before the scheduled time of sale.
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- If there is a sizable depreciation in the value of equity assets in a very short span, then you should immediately consider a review of assets to check the proportion of losses. If the losses incurred have already crossed the risk-taking threshold, then you should devise a strategy with which you can exit the investment with minimal losses. There can be an unforeseen situation following which a stock can slip below the long-time support levels, paving the way for more multiple year bottoms.
- An event affecting the business, a monetary policy action, a government decision on industry, a change in tax regime, a sudden withdrawal of funding or subsidised offerings, premature termination of ongoing contracts with the enterprise, a corporate scandal, an internal management fraud, a huge loss from a high-return yielding market are some of the adverse situations that can steer the share prices in negative territories.
All of these should be dealt with utmost intelligence as buying and selling actions are the most delicate decisions and can’t undone them.
