1Semana·

We are back to the 10k 😆.

After this correction I have learned some valuable things that I would like to share with you ✍️.

1° The Market doesn't Care how Undervalued a Stock looks 📉

I have seen from my own experience how a company like $HPE (+1,68%) fell almost 20% in days even below its book value, making a correction almost as big or bigger than other +30% P/E companies.

2° It is always necessary to keep cash reserves 💵

We cannot predict what the market will do but if we have cash reserves we can take advantage when the market drops by 7, 8, 10 or 20%.

And that's precisely what will probably make us outperform in the long run 🚀📈.

3° Investing in Value is Better than Investing in High Expectations 💰>💸

Although my portfolio has fallen other companies with much higher P/E ratios have corrected much more companies like $SPOT (+3,13%)
$SOFI (+3,75%)
$TSLA (+0,65%)
$SHOP (+0,64%) and a long list have corrected up to 40-50%.

10Posições

€ 10.027,89

12,85%

4 Comentários

Simone B.@TheRealSimone

1Semana

Cash reserves purely have an issue: decrease your total return, you might evaluate if some bonds or gold or even a monetary etf fit your allocation. These assets tend to be uncorrelated with stocks and you might sell some in profit positions to buy more stocks

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Alfredo Arcos Alegría@Alfre2

1Semana

@TheRealSimone with cash I also mean money markets funds, and I actually disagree in something

Bonds in long term 10/20/30 years have a correlated behavior with the stock market in the sense of interest rates (when interest rates goes up stock market and bonds go all down and in the other way it’s correlated too) and on the other hand I don’t like that much the investment in things that doesn’t generate value like gold or bitcoin even when the first one it’s a good example of something that have been working really good for so long (and probably continues to do so)

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Simone B.@TheRealSimone

1Semana

@Alfre2 mine was only a suggestion :) if you already considered those possibilities and established that they don't work for you it is ok :) just remember that keeping liquid cash without an earning yield must be considered as part of the portfolio and will decrease your return. Let do an example: you have 10k but you keep 2k (20%) to invest when the market decrease... So even if you gain 7% per year on average from your invested part, you'll have like 8k*7%=560euro that on the total portfolio is 5.6% yearly on average. On the other hand if you invest everything you'll have 7% on the portfolio on average... So practically keeping 20% cash will cost you 1.4% of your annual yield (you can easily reduce the impact with just a monetary ETF)

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Alfredo Arcos Alegría@Alfre2

1Semana

@TheRealSimone you’re right it decreases the overall as you just explained, but also cash has great potential growth in this times like this one (and that’s the point), as Peter Linch said once “with luck you will see 10 times the markets drops in -25% corrections in your investments lifetime”

(I already lost the fist one ☝️)

And by the way thank you for your suggestion!

I just argued to have a discussion (in the good sense of the word) :)

Most of the times it help me to learn new things and also we all help each others by just share our ideas and thoughts 💭 💡

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