Wednesday, May 13, 2009
Guest Editorial by Amy Calistri, Editor, Street Authority’s Stock Of The Month

Editor’s Note: It’s the investing version of being caught between a rock and a hard place. With a weak economy and volatile market impacting stock portfolios, many investors can either be tempted to sell everything, or buy more to offset their losses. 

Neither decision is correct. The trick is to own a portfolio that is both manageable in size and contains quality stocks that can survive and thrive during good times and bad. Easier said than done, but in today’s guest editorial from The Street Authority, editor Amy Calistri gives you three compelling reasons why you should trim your portfolio - and how to build one that will withstand the market’s erratic behavior.

Martin Denholm, Managing Editor, Smart Profits Report
 

When You’re Spoiled For Choice, Results Can Suffer 

To combat office distractions that can hamper my productivity and result in higher stress levels, I now come into work about an hour before my colleagues. 

I don’t do it to show off, but the extra time without distractions really helps my focus. In short, turning off the background noise has allowed me to simplify things - and get better results. 

What does this have to do with investing? A ton. 

Oftentimes, the investing waters are pretty murky. There are thousands of potential plays - and the trick is separating the “distractions” and the “noise” from the real winners. 

For example, you could try to play a rebound in the automakers. You could day-trade the banks, profiting from their roller-coaster moves. You could try to find companies that are simply undervalued and will rebound once this crisis passes. Or you could simply stick with index funds and ride out the storm. 

But the problem is that there can be too many options. It’s like trying to drink from a fire hose. Too many choices make it hard to nail down the winning investments for your portfolio. 

Here’s a way around it…

Three Reasons To Trim Your Portfolio

Like I do every morning by getting an early start, I think successful investors need to turn off the distractions and focus their attention on a small group of the best investment ideas. Drink from a glass, instead of a fire hose. 

By making your portfolio a manageable size, you’ll find that… 

~ It’s Easier To Monitor Your Investments:

For example, if you have a portfolio of 50 stocks, how well can you pay attention to each one? Even if you read up on each one for just an hour each week, you’d have a full-time job (plus 10 hours of overtime), just to give each its time. 

Plus, in a market like this, it’s more important than ever to devote enough time to your holdings.