After a raging bull market, capital preservation may be in order. After all, the last thing you want to do is give up all of your gains and then some. If you do, that would be like wasting a whole bunch of time and emotional capital.
Since I started investing in 1995, I’ve round-tripped many individual investments. As a result, most of my equity capital has been invested in passive index ETFs. You might get lucky buying a stock with great gains. But you’ve got to get lucky twice by knowing when to sell the stock as well.
For example, soon after I had bought Life Time Fitness Group, the stock zoomed up 40% within 30 days. Once the omicron news came out, the stock came all the way back down to my original purchase price. As the stock collapsed, all I could think about was what a waste of time it was researching and writing my article.
Let’s discuss capital preservation and our desire to protect our money.