I used to enjoy buying beat up stocks and waiting for them to be profitable. Not that I was very good at it. But I was good enough to not lose money too often. And when I did, it wasn't very much. It was worth the excitement and adrenalin rush when I was younger.
Back then, I had the cushion of a job that covered my living expenses. If I made a poor choice and the position lost money, it didn't affect my lifestyle which was supported by my paycheck. Now that I'm retired, I depend on my investments to cover living expenses now and in the future. Thus, short term losses from poor stock buys create more negative emotions, such as worry, anxiety, and regret, more than when I was younger.
Right now, the stocks portfolio I bought on the dip is up slightly. I'm feeling good. However, it took a month worry, anxiety and regret before it changed to excitement. Not worth it to me to emotionally go down before potentially going up in the end.
At this point, I plan to retire from large scale buying the dip in the future. I may buy the dip for the company from which I retired, or a couple other select stocks, but no more that 5 or maybe 10. That way I can avoid the emotional downside I felt this time, even though it appears that it has worked out for now.
If I do make a major buy the dip purchase in the future, I will be buying index mutual funds or index ETFs for the S&P 500 or the total market.
For more on Crossing Generations, check back every Thursday for a new segment.
This is not financial, stock picking, nor investment advice. Please consult a professional advisor.
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