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Proverbs 22:7 The rich rule over the poor, and the borrower is slave to the lender.
If you heard mysterious loud screams of pain yesterday, don't worry. It was just the anguish felt by many investors who were over concentrated in Netflix stocks. On Wednesday, the stock fell over 30% and lost over $40 billion in market capitalization causing many analyst to change their positions and downgrade their recommendations.
We can discuss what led to this plummet, but this is not the platform to do so. Here are a couple of tips you can think about to reduce your risk of this happening to your portfolio.
Diversify your portfolio- Unless you are Warren Buffett and have 100 analyst working for you at all times, looking to spread out your risk may be the best option. Choosing the best stock you saw on a Facebook meme or Crypto group message may not work out too well in your favor. (You can diversify with Cryptocurrency but the same rules applies for Cryptocurrency as traditional stocks)
Monitor Heavy Concentrations- With stocks, when things are good, they are really good, but when they are bad, they are really bad. Over concentration in stocks, without rebalancing, may expose you to more risk than you initially intended. By monitoring your investment quarterly, you can spot investments that may overweight a portfolio through capital gains or reinvestment of dividends. You can combat this by allocating future funds to different investments.
So if the plummet of Netflix taught you anything, it should have taught you that losing 5% or even 10% over a quarter or 6 months, in a well diversified portfolio, is better than losing 30-35% overnight!
One thing I learned about the market is that, it goes up, it goes down, but at some point it will go back up.
Figuring out when all this will happen...that is the hard part. We can't predict the future but we can position ourselves to take advantage of the market at each point, either buying in, or holding on. And having a financial advisor to do this for you...is invaluable.
If you don't know what you have in your portfolio and want a quick tool to find out. Here is an portfolio analyzer you can use: What's In My Portfolio?
Simply take your statement, add your holdings, and it will help you figure out if you are over concentrated in a position.
If you need additional help you can always schedule a free 30 minute consultation.
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As Christians, we were taught to be good stewards over our tithing and giving to the less fortunate. But when it came to our personal finances and investing we were left clueless on what the Bible says. What does the Bible say about managing debt, leaving a legacy, investing, and planning for your retirement? Mr. Christian Finance answers these and many other questions because we want to teach you how to become rich and righteous!
Meet A.B. Ridgeway:
A.B. Ridgeway, MBA, CPWA®️ (info@abrwealthmanagement.com) is the owner and Christian Financial Advisor with A.B. Ridgeway Wealth Management. With a decade in the finance industry, his goal is to give believers clarity around the most confusing topic in the Bible, money, and tithing. A.B. Ridgeway helps tithing Christians become cheerful givers but unlocking their money-making potential, so they can prosper and be the great stewards of the wealth God has entrusted them with.
*Disclaimer: This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. This is strictly for information purposes. We recommend you speak with a professional financial advisor.
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