Hey everyone! Figured I post a quick note as the year comes to a close. Today marked the last trading day for 2023. While the markets closed down today, both the SP500 and Nasdaq index has been positive for the last few months and weeks and definitely positive for the year.
While most of the chatter I heard over the last two weeks has been about booking gains in some or all positions by asset and fund manager and guidance to individual investors to do the same, I wondered if I should be selling anything?.
While I must admit I closed off positions on two stocks that have basically failed their original thesis and have no hopes of coming back, I decided against selling other positions partially to capture profits or for tax loss harvesting. The later, tax loss harvesting, while a meaningful income tax reduction methodology, I have never been nimble enough frankly to get back into the markets as trying to remember the 30 day timeframe and then timing the market entry is easier said than done :)
But all this selling of position to book profits towards year end made me wonder if that’s the right idea for Individual investors. And the conclusion I came to in the end is to just sit back and do nothing! Fund managers need to book profits so that then can control their quarterly and yearly performance comp metrics, but we Individual investors have no such short time yard stick that we need to measure ourselves to. So why risk selling positions and trying to time the entry again after the 30 day lockout period while knowing that’s a fools erand? We have enough data out there to prove that most individual investors aren’t nimble enough to do this.
I’m comfortable with my open poisitions and still have strong convictions in them. So what if it dips a little in the coming months? As long as my original thesis holds true, I plan in keeping these position open. And in that case, playing the game of jumping out and jumping back in just doesn’t make sense.
So for others like me who were wondering about these similar things, hope my thoughts give you another point of reference. There is no right answer when it comes to this. The right action is one that lets you stay in your comfort zone and continue to stay invested in your strong convictions positions. For me, that means do nothing. Happy holidays and See you all in the New Year!