Two Reasons I love Volatility
Posted on | May 8, 2010 | No Comments
This past week was a reminder for some who have already forgotten the lessons of late 2008 to early 2009. Markets can turn south, and quickly. This volatility can be gut wrenching as you watch the value of your portfolio drop.
But for people like me, it brought a smile to my face.
Uh, What?
In the sea of red, I thought, wow, there are almost certainly some stocks that have dipped into the value terroritory again. Many small caps got punished way out of proportion to the overall market. That is one of the great things about investing in small cap stocks. Opportunity number 1 is the pool of possible investments just went up.
If you are scared about the long term prospect of a stock you own, don’t blame the market, perhaps you shouldn’t own it. Opportunity number 2 is re-evaluating your portfolio. We all make mistakes. The question is whether you would buy more of stocks that you own at a lower price. If not, again, it is a time to reexamine the choices you have made. Perhaps you have been too hasty in making stock selections. I have certainly done that. I am reviewing all my positions. If I don’t think they are still great opportunities, and if they are below the price I purchased them, then I probably made a mistake. If I confirm that I like the investment, perhaps I should add to my position.
Market Drops are opportunities for finding value and reevaluating your positions. If you look you will find value. Happy hunting.
I will be posting irregularly for the next couple of weeks. I am working on the series finale of a television series of I have been working on for years. Think of it as tax season for an accountant. I am slammed, but still looking for value.
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