It’s always a good idea to adjust your investment strategies over time. Those of you who have been following me closely know that I had a real “knack” back in 2022 for picking losing stocks. However, I refused to let them go and continued buying into them as the buy signals got stronger with every drop, and they became more and more attractive, with respect to all of the indicators I use to make investment decisions. And, as usual, I generally refuse to sell on “buy” signals and frequently do the opposite. I wrote about this back in March and April and didn’t realize at the time that this would become a multi-part series but that is how things played out. Here it is many months later and I am still fighting the downs and ups and downs of what has been a highly volatile stock market over the past year (most of which have been downs). The fight continues but it appears my latest strategies have worked extremely well.
The strategy I used for much of 2022 involved continuing to buy stocks I owned which dropped substantially. However, later in the year I changed this strategy by trying to find new stocks which appeared to be just as attractive and buying those instead. That allowed me to take losses – when sensible to do so on the losing stocks – without invoking the wash sale rule – plus it didn’t allow certain stocks to dominate the performance of my portfolio as much as they had in the past. You can read about my previous strategies and how they evolved throughout 2022 by seeing part one, part two, and part three of this series.
There’s no question about me having a pretty lousy year in 2022 – it was my first down year in 11 years – but sometimes that will happen as an investor. The low point for me was when I was 142% invested (yes – I was using margin) and down 41.19% for 2022. At the end of 2022 I was 96% invested and down 23.6% for the year. So, things improved as the year progressed.
Is there any guarantee a given strategy will work? Of course not. Investing is primarily about making decisions based on various indicators, the associated likelihoods, and employing strategies accordingly. So, at best you can position yourself for a potential favorable return, but there is never a guarantee.
If I had not evolved my techniques and continued using my previous investment strategies, I would have been down 70% by the end of 2022. So, I’m very thankful that I modified my investment strategies throughout the year. As a point of reference, Kathy Wood’s ARKK stock gained 150% back in 2020 (nearly as much as my 164% gain), lost 23% back in 2021 when I had earned an 8.7% gain, and lost 69% in 2022 when I had lost 23.6%. So, I feel pretty good about ending 2022 with not too bad of a loss relatively speaking.
Things have been very different in 2023 so far and – although I had an entire year of downs and ups and downs throughout 2022 – I have gained 36% this year in just a little over 4 weeks! That’s about a 5-year gain in just over 4 weeks time! So, I’ve recovered all of my losses from last year (and then some). I always tell people that it makes sense to stay invested and to continue buying into downturns – even when things go badly – because when it turns… it turns. And you want to be fully invested to the extent possible when that happens.
I’ve done so well this year that I am now in the mode of “selling every gain.” So, every time my overall portfolio experiences additional gains, I actively look for more stocks to sell. I’m about 50% invested right now so I am finally becoming more of a lower risk investor much to my relief.
I was a high risk investor throughout 2022 (much to my dismay). I moved from being a low risk investor (back in 2021 – which is the level of risk I am supposed to be at given my financial circumstances) to a high risk investor throughout 2022. That was never supposed to happen. However, I am very much relieved that I still have the ability to “fight it out” and survive as a high risk investor. Needless to say, I will be making additional changes to tighten my techniques so that I don’t become as much of a high risk investor in the future.
I’m happy that I had the foresight to continue modifying my investment strategies. It really has paid off. This is something you always want to get into the practice of doing. Observe what happens and make adjustments to your investment strategies so that you can work towards improving your investment performance over time in accordance with your risk profile. I happen to presently be a low risk investor (although throughout 2022 I was temporarily high risk) but many of you will probably be higher risk investors. So, your investment strategies will probably need to be a bit more aggressive than mine.
You can be a very successful investor if you effectively use all of the tools and techniques available to maximize your investment returns. It’s been an interesting investing experiment I’ve been running so far for 2022-2023. We’ll see how things go in the future.
You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing and gain key investing insights and skills (https://brighterdayslifecoaching.com/published-books…/)
Also, you can read all about my stock market activities here: https://brighterdayslifecoaching.com/stock-market-activities/
I wish you much success in creating a brighter financial future for yourself, your loved ones, and those who follow.
Happy investing everyone!
#finance #stocks #investing #stockmarket #success