What is your best approach for missed opportunities?

[Deleted User]

Linton said:

Looking for opportunities with a small part of your portfolio is just not worth the effort 
I agree. A risk heavy "Satellite portfolio" or "fluid weighting", is basically the financial services industry's quietly moving away from more formally structured portfolios that have cost their clients a lot of money over the last decade.

Better in my view to invest as broadly as possible, and wait for the long term.
A lot of investors take comfort in that approach. That strategy lands the investor in the middle range of outcomes. The long term result - with rebalancing - would be below average. 

As the song goes, each investment is a time to win some or learn some.

Thrugelmir

With regards to rebalancing. Depends how many bear markets are encountered along the way.  Unbalanced will potentially be a roller coaster ride. In drawdown perhaps not advisable, 

[Deleted User]

Thrugelmir said:

With regards to rebalancing. Depends how many bear markets are encountered along the way.  Unbalanced will potentially be a roller coaster ride. In drawdown perhaps not advisable, 

Imo rebalancing isn't even likely to work in a bear market.
Thrugelmir, can you give an historical example of two stocks that made rebalancing between them work?

Thrugelmir

ZingPowZing said:

Thrugelmir said:

With regards to rebalancing. Depends how many bear markets are encountered along the way.  Unbalanced will potentially be a roller coaster ride. In drawdown perhaps not advisable, 

Imo rebalancing isn't even likely to work in a bear market.
Thrugelmir, can you give an historical example of two stocks that made rebalancing between them work?

Volatility is a form of risk. Rebalancing simply forms part of portfolio management tools.  Been around since the 1950's as a theory. 

Historically why would you even have held a portfolio consisting of just 2 stocks? 

bd10

Don't get worked up over any missed opportunity on the upside. There's always another day and another opportunity waiting for you. Just be very strict with losses. Cut them religiously and move on to the next trade. Remove emotions from it, think of it as just numbers, not money, never as anything tangible. That helps me. Bought at 50, stop loss at 40, if triggered, I get out. Just don't think about it in monetary terms. Money for me only comes into play when deciding the size of the position I want to take, but not while running it.

[Deleted User]

Thrugelmir said:

ZingPowZing said:

Thrugelmir said:

With regards to rebalancing. Depends how many bear markets are encountered along the way.  Unbalanced will potentially be a roller coaster ride. In drawdown perhaps not advisable, 

Imo rebalancing isn't even likely to work in a bear market.
Thrugelmir, can you give an historical example of two stocks that made rebalancing between them work?

Volatility is a form of risk. Rebalancing simply forms part of portfolio management tools.  Been around since the 1950's as a theory. 

Historically why would you even have held a portfolio consisting of just 2 stocks? 

You wouldn't but measuring the effect of rebalancing any two investments in your portfolio gives a good indication of the overall benefit (or otherwise) of the exercise. Actually, you can make it even simpler and calculate the effect of rebalancing a single investment against cash over time. Then you can see the gain, or opportunity cost resulting from what you did, or had done to you.
Assuming you want to know..

MarkCarnage

The original question seems to me to have two parts. A timing element, and whether a specific investment was appropriate in the first place. 
It also has an implication that market timing will add value. It can add value, but usually by chance. There would have to be quite a compelling reason for it in my view. For example, an investment trust might normally trade at a discount of say 5%, but is currently trading at a small premium to NAV. That might suggest waiting. However, if by waiting you succeed in buying it at a discount but the NAV itself has gone up by 20% in the interim, that defeats the purpose. 
Do the homework, set the strategy, and then invest. Don't try to second guess timing. Also try to rationalise the 'bear' case in terms of specific risk. Then if that risk materialises, you can decide whether to cut losses and get out straight away, or hold on if you believe there has been an overreaction. It's usually better to do the former IMO, as if the market hasn't priced in that risk originally, it's likely to take some time for it to play out, and it might keep getting worse.
As others have said, using some systematic basis can help too. I think it can be over engineered, but a simple review of what % you have exposed to different types of strategies/risks within your portfolio helps too. It's a lot easier when you are investing regularly than it is in the decumulation phase!

MarkCarnage

You wouldn't but measuring the effect of rebalancing any two investments in your portfolio gives a good indication of the overall benefit (or otherwise) of the exercise. Actually, you can make it even simpler and calculate the effect of rebalancing a single investment against cash over time. Then you can see the gain, or opportunity cost resulting from what you did, or had done to you.
Assuming you want to know..

Rebalancing makes sense if your requirements have changed. If you have moved into a situation where there is a requirement for more certainty of outcome for a larger part of your portfolio over a finite, and shorter time horizon (let's call it retirement) then there is a strong case for it. However, that might more appropriately be called reconstruction than rebalancing. 

Thrugelmir

ZingPowZing said:

Thrugelmir said:

ZingPowZing said:

Thrugelmir said:

With regards to rebalancing. Depends how many bear markets are encountered along the way.  Unbalanced will potentially be a roller coaster ride. In drawdown perhaps not advisable, 

Imo rebalancing isn't even likely to work in a bear market.
Thrugelmir, can you give an historical example of two stocks that made rebalancing between them work?

Volatility is a form of risk. Rebalancing simply forms part of portfolio management tools.  Been around since the 1950's as a theory. 

Historically why would you even have held a portfolio consisting of just 2 stocks? 

You wouldn't but measuring the effect of rebalancing any two investments in your portfolio gives a good indication of the overall benefit (or otherwise) of the exercise. Actually, you can make it even simpler and calculate the effect of rebalancing a single investment against cash over time. Then you can see the gain, or opportunity cost resulting from what you did, or had done to you.
Assuming you want to know..

Why would rebalancing two random stocks out of a sizable portfolio teach me anything?  

[Deleted User]

Thrugelmir said:

ZingPowZing said:

Thrugelmir said:

ZingPowZing said:

Thrugelmir said:

With regards to rebalancing. Depends how many bear markets are encountered along the way.  Unbalanced will potentially be a roller coaster ride. In drawdown perhaps not advisable, 

Imo rebalancing isn't even likely to work in a bear market.
Thrugelmir, can you give an historical example of two stocks that made rebalancing between them work?

Volatility is a form of risk. Rebalancing simply forms part of portfolio management tools.  Been around since the 1950's as a theory. 

Historically why would you even have held a portfolio consisting of just 2 stocks? 

You wouldn't but measuring the effect of rebalancing any two investments in your portfolio gives a good indication of the overall benefit (or otherwise) of the exercise. Actually, you can make it even simpler and calculate the effect of rebalancing a single investment against cash over time. Then you can see the gain, or opportunity cost resulting from what you did, or had done to you.
Assuming you want to know..

Why would rebalancing two random stocks out of a sizable portfolio teach me anything?  

Why would a sextant teach you anything?
Tell me the names of two long-hold investments in your portfolio, Thrugelmir, and I'll demonstrate for you.