Embrace Volatility: Strategies for Confident Investing

Newsletter , Volatility

This article is a website version of our weekly FREE Best Ideas Newsletter sent on 17.10.2023. Sign up here to get it in your inbox every Tuesday.

I hope you are managing the current market volatility well. I am not going to repeat what has happened recently as you have more than enough sources on that, I am sure.

Volatility is a fact of life

In the world of investments, market volatility is a fact of life that can lead to opportunities and risks. Even though I have started to see volatility as a fee rather than a fine (learned from the great book by Morgan Housel) I still find continuous market falls unpleasant. I’m not a robot…

It’s hard to explain the feeling, something like a mild bad mood that does not go away and an aversion to looking at my portfolio.

In general, I manage it well but it’s still an unpleasant feeling I sometimes find hard to shake off.

How are you doing?

We would like to check in with you and ask: How are you managing market volatility and your portfolio? Do you experience something like I do?

Best thing we can do

Volatility in financial markets can be unsettling, triggering fear of missing out or losing money. As mentioned in past emails, one strategy I use to maintain a rational and disciplined approach to volatility is to pay less attention to daily movements.

I check my portfolio on Mondays and for the rest I try to stick to searching new investments or doing research.

Ideas to manage volatility

Limit the Frequency of Portfolio Checks

As mentioned, try not to look at your investments daily. Frequent checking can lead to impulsive decisions that may not be in your long-term best interest.

Focus on Your Trailing Stop Loss Levels

Seriously consider a systematic approach to managing risk, if you do not have one set up already.

I follow a strict trailing stop loss system to keep losses low. It protects your capital during market downturns.

But more important that that is they help you manage negative emotions better. This is more important than you may realise as I have seen a lot of investors throw in the towel and sell everything just as the market starts turning around. That is the last thing you want to do as you have no way to make up your losses because you are out of the market.

Stop New Investments During Market Declines

Consider stopping new purchases when markets are experiencing prolonged declines. In my portfolio and both newsletters we follow the rule that we stop buying when a market is below its 200-day simple moving average.

Now only Japan, the USA and the MSCI World (helped by the US markets) are above their 200 day moving averages. That means no new ideas are recommended in other markets.

Use the extra time to research a few more companies or to see if you want to change anything in your investment process. I screened for Crash Portfolio ideas and found a lot of ideas already recommended in the newsletters mentioned below so there is no reason to get overly negative at the moment.

Remember, while market volatility can be unnerving, it gives you opportunities if you maintain a disciplined and patient approach.

By following these guidelines, you can better position yourself to make better decisions during turbulent times and reduce the negative emotional impact if wild movements.

Quant Value newsletter update

Four investments were sold, three because of trailing stop losses being breached, but overall, the portfolios are sitting on very acceptable profits, with Asia (especially Japan) continuing to surprise me.

Here are the profits of the current ideas in the following portfolios:

North America +12%
Europe +7%
Asia +21%
Crash portfolio (2022) +26%

If these ideas sound interesting, you can get more information here: Your Treasure Map to Europe, Asia, and North America's Hidden Gems!

Shareholder Yield Letter update

Since May, when we started the newsletter, 23 ideas have already paid an average dividend of 1.1% and am sitting on an average total return of 3.2%. One idea, HP Inc. was sold this month after it breached its 20% trailing stop loss.

If high yield large cap companies sounds attractive, you can find more information here: Invest big, win bigger with our market beating large-cap strategy!

Your, helping you keep losses and emotional stress low analyst

PS I know markets are uncertain BUT it is a great time to start building your buy list. Why not sign up today and start now.

PPS It is so easy to forget and put things off why don’t you sign up right now?