No. of Recommendations: 1
But the advice to sell on a 20% drop has some functionality

I would offer a slightly different opinion on this. I don't think it is reasonable to continually evaluate your holdings on a daily or even weekly basis. Monthly might even be too much. I look at my holdings as their quarterly results come out and see how everything's going. I glance at press releases to see if they are truely material as they come out, but I don't want to overthink my investments. I made good decisions at the time and my quarterly analysis will suffice as long as nothing material changes. That being said...

I do look at market swings (plus OR minus 10% in price) and try to find out the reason for the swing. A drop of 20% (or a gain of 20%) while big, is not momentous in a sharp bull or a sharp bear market, which is where I think we're currently at. To sell after a drop (or a rise) without knowing why its happening is too mechanical. Just remember, the "market" is acting on some news when there are swings. Find out that news and decide for yourself if you think it is material. Once you have, decide if you need to act on it.

Thoughts? Comments?

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