Today’s Lesson: Watch Your portfolio

Every day, week, month and year, you can compare yourself to the market as a whole.  Actually, I don’t recommend comparing yourself to the market every day, or even every week; getting too close to the situation can be too stressful and it’s an accurate gauge of whether you’re doing a good job.

But there’s no doubt that measuring my performance every month or year is a good thing, and doing so gives me a competitive spark, pushing me to review my past trades, develop new rules, and re-emphasize proven rules–all in order to boost performance.

Having Control

As for having control, that’s obvious, too.  You are your own boss when it comes to your portfolio; you’re the one who clicks the mouse to buy or sell a given stock, and you’re the one who decides how many shares to own.  (If you want to be cute and say that you use a newsletter to tell you what to do … the fact is, you’re the one who chose that newsletter.)

I’ve talked to dozens of subscribers just in the past couple of months who ask my opinion on financial stocks that have been taken out and shot like Citigroup or Bank of America; commodity stocks that broke down in early July, like U.S. Steel (now off 40% since late June) and Southwestern Energy (fell 40% from July 2 through July 23!); “safe” blue chips like Boeing (off 31% from mid-June through the end of July) and so on.

Watch Your Portfolio

These investors aren’t guilty of using bad systems or being bad investors; they’re just guilty of not watching their portfolios closely.  And therein is today’s lesson: Watch your portfolio!  Make it a “rule” to check up with your stocks for a couple of minutes every day, or at least, a few minutes every other day.  You don’t need to read every news story or listen to every company presentation–just knowing the action of the stock itself is usually enough.

On the weekends, I advise spending a bit more time, possibly an hour, just flipping through news stories online, checking out a chart, and maybe reading the weekend edition of Investor’s Business Daily.

Set Up a Spreadsheet

Most important … you should set up a spreadsheet on your computer, and each month (each month!) enter your portfolio’s total value, and the percentage gain or loss each month.  This will force you to face the facts of your portfolio’s performance, for better or worse.

If you’re holding on to a bunch of old, losing stocks and your portfolio has been hammered by the bear market (and likely underperformed the preceding bull market), then the simple act of paying attention will improve your performance.  So do it!