The Seasoned Investor

HOW DO YOU KNOW YOU’RE A SEASONED investor? As you build and rebalance your portfolio, here are eight signs you’re becoming a market veteran:

  • You have mixed feelings about rising markets. Yes, it’s great that your portfolio has grown fatter. But it also means future returns will be lower. By contrast, tumbling markets excite you, because you could get the chance to scoop up investments at bargain prices.
  • You select stock and bond funds that you would be happy to hold for a decade or longer—and you do indeed hold them for that long.
  • When you make investment decisions, you think not only about the potential return, but also about risk, investment costs, taxes, why you’re investing and your broader financial picture.
  • You can succinctly explain why you own your current portfolio, including the reasons behind each investment.
  • When your investments lose value, you’re never surprised, because you have a good handle on the likely risk and reward for every investment you own.
  • You can coolly decide whether to buy or sell, without getting fixated on what’s happened in the market recently or what price you paid for a particular investment.
  • You’re mentally prepared for parts of your stock portfolio to have wretched results over five and even 10 years, you have the patience and tenacity to stick with these sectors—and your financial goals wouldn’t be at risk if stock returns were truly awful.
  • You realize that markets are unpredictable and that it’s extremely difficult to earn market-beating returns, so you always have some money in bonds and some money in stocks, and you avoid overly large bets on individual investments and narrow market sectors.

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