This is the time of the year when the media is having a field day again. Over the next couple of months, you will find headlines such as the following:
- 10 top stock picks for 2007
- The perfect portfolio for 2007
- My best stock for the year ahead
- 2006 losers ready to rebound
- 10 stocks for 2007 and beyond
It always amazes me where the reporter finds the ability to predict the future as to which investment may be ‘perfect’ for the next 12 months. Perfect for whom?
What are you supposed to do? Sell every investment that did well in 2006 and buy these new favorites? That’s ridiculous.
Keep in mind that these are nothing more than wild predictions and about as accurate as you can forecast the exact amount of money you will have in your checking account by 12/31/2007.
My preference is to hold my (and my clients’) no load fund and ETF positions, with no emotions attached, until economic circumstances change and my trailing stop loss points get triggered. That eliminates the silly guesswork and allows me to have a plan in place that can be easily monitored and adjusted.
Of course, this presumes that you work with an exit point strategy. You do use sell stops on your investments, don’t you?