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How to manage your investment portfolio through rocky stock market times

by , 10 September 2015

Global stock markets have been on a rough ride over the last few weeks, seesawing up and down.

The Johannesburg Stock Exchange has also been extremely volatile.

So how can you manage your portfolio to deal with these rough stock market movements?

Read on to find out…


Dealing with the stock market’s moves


When the stock market is veering about all over the place, it can make you feel very nervous about your investment portfolio. After all, you don’t want to lose money.

That’s why you need to have a plan of action to help you to manage your portfolio and deal with volatile price movements.

The important thing is to take a realist view of what may happen. The stock market may recover or it may enter a bear market.


What to do with your investment portfolio


There are three things you can do that will help you cope with stock market ups and downs…

Step 1:
Look at your asset allocation.

You want to ensure your weighting in stocks isn’t too heavy and you’ve got a nice balance of other assets in your portfolio.

You should aim to spread your investments across stocks, bonds, property, commodities and cash at the very least. You could also consider putting some cash into alternative investments.

If you’re worried you hold too many stocks, what’s the best guideline to stick to?

Benjamin Graham, the founder of value investing and mentor to Warren Buffett, said you shouldn’t hold more than 80% of your investment pot in shares, but it shouldn’t be less than 20%.

You should use your age, tolerance to risk and time horizon to determine the best level for you.

Step 2:
Stick to your stop losses.

Make sure your trailing stop losses are no more than 25% below your shares’ recent highs, Alexander Green in Investment U explains.

Step 3:
If you don’t already have significant exposure, move into large value stocks with growing dividends. This means you’ll receive an income too.

So there you have it. How to manage your investment portfolio through rocky stock market times.

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How to manage your investment portfolio through rocky stock market times
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