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As you manage your portfolio, different factors will have an effect on its performance. The economy, for example, may go up or down and cause the value of your holdings to rise or fall. Perhaps you followed some advice from a friend on a "can't lose" stock and ended up losing. Maybe you're invested in foreign currency and that currency is moving like a rollercoaster. Whatever the case may be, you need to monitor the performance of your portfolio at all times so that you can react if something happens.
Monitor the economy
Monitoring the overall economy is complex and reaching a confidant conclusion that you can act upon can be difficult. However, there is plenty of information available for you and your skill in this area will increase as time goes on so don't let the complexity of economic analysis keep you from trying it!
Monitor the industry
Aside from monitoring the economy, you will also want to monitor the industries in which you're invested as well. Unfortunately there isn't necessarily a clearing house of information on each industry, so you have to be a little resourceful on your own in order to glean industry information.
Where do you find industry information? That depends on the industry. If you really prefer to stick with just a few industries, as some investors do, you may consider subscribing to an industry trade-journal to help you understand that industry a little more. Some industries have their own association and you may be able to join as an associate member. Sometimes it's just a matter of finding the key players in an industry and watching what they do and adjusting you portfolio accordingly.
Monitoring the industries you're invested in can be challenging if you are diversified across several industries (which you should eventually be). But if you start in just one or two industries and familiarize yourself with one or two key indicators, you can slowly build up what you know about that industry and introduce other indicators and other industries into your weekly researching routine without any trouble.
Monitor the markets
Although the economy and the markets are closely tied together (that is, when the economy goes up, the markets go up, when the economy goes down, the markets go down) you will still want to keep an eye on the markets themselves.
One great place to watch is the S&P 500 Composite Index which is a collection of stocks that represents the economy. It is a great indicator of the current health of the stock market and of consumer confidence.
Some investors, for example, follow contrarian thinking and enjoy success by buying when others are selling and selling when others are buying. How do they know? When stocks and companies are featured on the covers of magazines, those prices are going to spike, then drop. If you see stocks on the covers of magazines, sell.
Monitor yourself
Monitoring yourself will help you to decide whether you need to make changes in how you invest or in what you invest. Here is a checklist to ask yourself when you go monitor your portfolio:
a. Does the portfolio still match your dreams and goals?
b. Are the assets still allocated within your preferences but also to allow for expected market movement?
c. Will you need to make cash withdrawals?
d Do you have enough liquidity to make purchases if an opportunity arose?
e. Has your "overall portfolio" changed, requiring a change in your investment portfolio?
f. Should you take on more risk or less risk?
g. Is the average term to maturity on my bonds appropriate?
h. Are any bonds coming due?
i. Are my equities appropriately diversified?
h. Are my equities appropriately matched to my risk preference?
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