Better 10 minus 5% than one minus 10%, is it true?

Strange yet truth?!? If you make a simple calculation you’ll see that on a portfolio of 10 lines (each lines has the equal value of dollars or euros or whatever you prefer be gigamillionaire :D ) if everyone loose 5% that man s that your global value has lost 5%, on the other case if 9 stay flat and one looses 10% you’ll globally loose about 1%.
So, it would be better to loose only 1%, or not?

Let’s analyse the overall situation of 2008, it well represent Value Finance Portfolio, well no, to be honest 2008 has been much more worst than 5% :D

The key thing of this post is to say that when the market goes down, all together, more or less fast, probably your exit strategy won’t push you to sell any lins of your portfolio because probably your lines are still the great companies you’ve bought some time ago, just trading for sale in this period. Please note that in stock exchange Period could be a couple of years, not just a couple of weeks!

So the importanc of thinking in LONG TERM.

In these days stock markets are getting crazy and our portfolio well reflect the global situation, looking at the companies’ first semester report we can easily see excellent results and all our companies are still fitting all the list of our investing criteria that have brought us to buy them, so, my dear reader, why sould w sell? Ok if the market keeps going down we could sell now and then buy later, the same companies, when the market finally r start going up. The problem is that: we don’t know the day the market, this maniac depressive, we’ll start going up.

History has shown that if you were missing the most profitables singles days of trading, because you were out of the markets you’d loose the biggest profits.

If the companies keep fitting your investment criteria, don’t care about th crisis of Mr Fool (alias Stock Exchange), hold in your portfolio and in 5 years you’ll smile with 100 teeth!!

PS: when all the market is stable and one company is loosing 10% in few time, please feel free to check 10 financial newspaper and 20 financial web site in order to understand why and eventually, consider only if the “Because” is in your Exit Strategy list!