How much pain are you willing to take?

How much pain are you willing to take?

If you're a nimble trader, move on, this post is not for you.

Something no one likes to confront is pain. When investing pain comes in the form of trades going against us or positions not holding their gains or worse becoming losses.

How do we mitigate this feeling or avoid this pain?

If you've been with me for very long you know I've covered the setup of my long-term portfolio, the rules, and buying and selling. I'm human, I have emotions, but my process makes me sleep easier and makes me more methodical in how I approach my investments. Specifically to the LT, I'm not thinking in weeks, sometimes months, but usually much further out - years.

If I must sell, I sell for one of three reasons. The first, I've already gone over, either price target hit or stop loss hit. Second I want to rotate funds quickly into other existing holdings or initiate a new name I like better due to projected performance. Lastly, to shorten my open positions or use the cash to fortify those positions.

But Bags, we're in a selloff, I'm tired of watching this POS, my thesis has changed, I'm overweight in a position that's gone sour... there's literally an infinite number of reasons you may want to sell and that's absolutely ok too.

I ask you - why do you want to sell?

Is it because you want to escape short-term pain, or do you have a better long-term plan?

There is no shame in selling, but breathe and think about it before you pull the trigger. You'd hate to move on from something that is worth considerably more later in your investment horizon.