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 How to Manage Your Investments 

When it comes to investing; picking the right stocks to buy is only the start of your job. Then you must manage your investments. That includes tracking each of your stock’s performance, watching for sell signals, and rebalancing your portfolio when conditions warrant.  Here’ how.

Monitor Your Portfolio
Periodically check your holdings to see if anything has changed that might require action on your part. Check weekly if you own mostly small fast-growing stocks. Checking monthly is sufficient if you hold large well-established stocks such as Pfizer or Google.

Start by checking recent stock price action. Stocks move up and down every day, often for no decipherable reason, so don’t overreact to small price moves, say 5% or less. Also, most stocks move with the overall market, so take market action into account when evaluating your stocks. However, if your stocks do make a big move, up or down, action may be required on your part.

If one or more of your stocks have moved up substantially, say by 25% or more, it may be time to rebalance your portfolio. Conversely, if the market has been steady or uptrending, but your stocks have dropped by 15% or more, check for news that might affect your stock’s fundamental outlook.

Portfolio Tracking
Most online brokers provide portfolio trackers that show you how much your stock’s share prices have moved since purchased. But they may not include dividends when computing returns and they may not track price action over specific periods, e.g. past four weeks, year-to-date, etc. You need that information to effectively manage your portfolio. Here are two of many sites that provide worthwhile portfolio trackers.

Morningstar’s Portfolio Manager (www.morningstar.com) automatically adds dividends to share price moves when computing total returns. It reports returns for a variety of fixed timeframes, but not from the specific date that you purchased the stock.

CNBC.com’s (www.cnbc.com) Portfolio Tool does compute your total return, including dividends, for each stock based on your purchase price, but doesn’t list returns for other periods such as year-to-date, last 12-months, etc.

Checking News
The easiest way to follow the news on your stocks is to set up a portfolio on FINVIZ (finviz.com). Then, simply navigate to your portfolio on FINVIZ to see recent news headlines affecting your stocks.

Rebalancing
You can minimize risk by splitting your available cash evenly among all stocks in your portfolio. That is, if you’re buying 10 stocks, put 10% of your cash into each, instead of overweighting the stock that you think has the best prospects.

Over time, some of your picks will outperform and others will falter, throwing your portfolio out of balance. So, periodically rebalance your portfolio so that you again have equal dollar values of each holding.  

When to Sell
Sell stocks that you wouldn’t buy today if you were evaluating them as new candidates. Sell signals include declining profit margins, slowing revenue growth, disappointing earnings and weak price charts. If you set a target price when you bought, sell when your stock hits that price, even you think that it has more to run.

Monitoring your portfolios isn’t as daunting as it sounds. Once set up, the process should take around 30 minutes.

published 2/5/16

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