Address Root Causes (of poor portfolio performance)

Poor health has root causes. Usually, poor diet and no exercise.  

Poor portfolio performance also has root causes. Usually, stocks that go down. But, this is not the only culprit: add poor position sizing and non-existent position management to the list.

Stocks going down is expected and cannot be helped. What can be helped is sizing and managing stock positions so that stock declines never catastrophically damage portfolio capital. If you don't know how to size and manage your positions, see the "Six Questions" topic below.  

Why do you care? If you don't - aka you are a Long Term Buy and Holder (or HODLer) - you risk eventually breaking the Number One Rule of Stock Club.

Number One Rule of Stock Club: NEVER suffer catastrophic losses

Reminder: you can get back to break-even from a 10% loss with an 11% gain. Manageable.

But, a 50% loss requires a 100% gain just to get back to break even.

Worse yet - emotionally, the cost is devastating. Try it. Guaranteed you won't like it. Moreover, if you have one stock that has cratered by 50% or more, likely you have others suffering the same fate. Try being objective and keeping your head about you with that carnage battering your statement.

How not to break the number one rule of Stock Club - you MUST be able to answer these Six Questions:

Say you've identified a stock you want to buy. (A full topic of its own.) Below are six primary (plus closely related) questions you should ask yourself, and be able to consistently, objectively, and logically answer, before you actually pull the "buy" trigger.

1. How many shares will I buy? (And, why?)

2. If the stock goes down, will I buy more? (And, how much more? When? And why?)

3. If the stock goes down, will I sell? (And, will I sell my entire position, or just part? When? And why?)

4. If the stock goes up, will I buy more? (And, how much more? When? And why?)

5. If the stock goes up, will I sell? (And, will I sell my entire position, or just part? When? And why?)

6.  If I end up with new dry powder because of a sale, what will I do then?

But I've never answered these and I've never been hurt!

You've gotten lucky. And/or you're new around these here parts. And/or you didn't participate in the crypto melt-up then melt-down as did all too many others.

OR you have a system that already works. If so, congratulations! Likely you haven't read this far.  

For the rest of you, try the above and see if it helps. Of course, even if you do follow this, there are no guarantees that you'll profit in the market. But, I can practically guarantee that if you do NOT size and manage positions well - that is, address two key root causes of poor portfolio performance - you will not profit in the market in the long run.