As a buy and hold value investor (primarily) I sometimes have to remind myself to focus on my objectives and investing strategy. Watching and reading the news everyday my brain often gets visits from the Good Idea Fairy. Fortunately I am not impulsive with my money otherwise I would have made a bunch of bad investing decisions.
Dollar Cost Averaging
Every time you have money to invest it doesn’t have to be in something new. Keep investing in the companies you own and are still part of your strategy. Over time the cost basis will average out and you can sell when you feels there is no more room for growth.
There are some hot IPO’s coming out this year that I would love to own. Airbnb and Uber are at the top of my list. However, I am just speculating that they will perform well. There are no fundamentals to track, no past charts of year over year performance. Just a gut instinct that I like these companies.
Avoid News Trading
News cycles are typically over in a matter of days. A single day of headlines doesn’t make or break a stock. If a company is out of the headlines in a few days then your impulse to buy or sell was probably poorly timed. That’s not to say that there isn’t opportunity to buy when there is a dip in price due to a bad headline. But, people have a hard time buying when their brain is telling them to sell.
Stay focused. Ask yourself if this makes sense right now? Will this have made sense 5 years from now? When the Good Idea Fairy visits you are better off shooing it away.
As always, good luck!