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This training/challenge is for educational and informational purposes only. These materials do not constitute a recommendation to engage in any particular securities transactions.
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Week 3: Slay It Up – Stock Diversification
This week it’s time for you to learn how to craft a suitable mix of investments. Diversification and asset allocation help you build a foundation for investing in the stock market. This is a great place to start if you are a beginning investor or would like a refresher if you have already started on your investing journey.
Settlement Date
It is the date that your buy or sell transaction settles with the firm and your funds are officially in the market or available for withdrawal. For stocks, this is usually three business days after you submit your request. In the business, we call it T+2 or trade date plus two business days is the settlement date.
Day 19 – Trading: Close the Trade
Closing the trade means to sell the stock and remove the shares from your portfolio. Often, investors rarely have an exit point when entering a trade and may hold on to stocks without an endpoint in mind. However, good investors enter a trade knowing that they have an exit strategy to potentially close the trade at some point, if at all. There can be several reasons why you would want to sell shares. Let’s take a look at a few:
The stock and/or company performance has stalled or declined – The company may not be growing and in fact, may be experiencing a decline. No one wants to hold on to a losing stock. Therefore, if a company is no longer moving in a positive direction, for whatever reason, you may want to sell your stock positions and move on.
The company is moving in a new direction – The company you have invested in may have changed course and may be moving into new business ventures that don’t sit well with you. This can happen for a variety of reasons, such as government influence or merely chasing trends such as the newly created cannabis industry. You may want to shift your investments away from a company that no longer operates in the industry you originally signed up for.
It’s time to cash out – You may have reached your goal in terms of Junior going off to college or celebrating your retirement and it’s time to cash out. You may need to sell some of your stock to realize the gain and use the funds to take care of necessary expenses.
Lastly, good investors know when to exit an investment – price, company, retirement or leave for an inheritance. This exercise should be no different for you. At the end of the day, some stocks may be worth holding on to, but never feel emotionally tied to a stock if there is a clear and present reason why you should liquidate and move on.
Today’s Investing Activity: Today’s activity focuses on having the end in mind when it comes to your stock positions. Some stocks are not meant to be held forever and some stocks you may earmark for leaving to loved ones – the choice is yours.
Indicate an exit strategy for each of the stocks on your watch list or account.
You can use the “Close The Trade Worksheet” to indicate your exit strategy for each stock on your portfolio.
STEP ONE:
List the stocks from your watch list, portfolio worksheet, or current accounts
STEP TWO:
Indicate an exit strategy for each stock
STEP THREE:
Share a screen shot of your worksheet in The Stocks & Stilettos Society or feel free to leave a comment below
Today’s activity focuses on having the end in mind when it comes to your stock positions. Some stocks are not meant to be held forever and some stocks you may earmark for leaving to loved ones – the choice is yours.
Tomorrow: Day 20 – Saturday Skill Check
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Happy Investing!
Cassandra