Wednesday, November 29, 2017

Importance of diversity in portfolio

Today the NASDAQ got hit. Nearly all large cap technology stock dived as money flow out of technology into financial, consumer and industrial stocks.

My 401k portfolio consists of mainly the technology stocks. My position in WDC, AMAT and NTNX got hit.

1. WDC is the worst trade. It failed wedge pattern and dive down 2 days ago due to analyst downgrade. Today is closed below 50MA in huge volume again. My position is under water for 12%. Based on IBD selling rule, I should close the position when having 8% downside.

2. AMAT: I have hold it for almost 3 months with entry at 45.4. I still have 17% gain. However it went down from nearly 27% gain. I will close the position if it close below today's low (51.9) in the next few days.

3. NTNX: My entry is 22.4 with 45% profit. I set up a alert at 34.85 to take some profit prior to tomorrow' earning. However, the alert triggered immediately at open. I was busy and cannot monitor my position until 10:30am. I'd better to set up sell limit order in advance.

Lesson: Even inside 401k account, I need to set up stop order with maximum drawdown of 8% per IBD sell rule for long term trades.

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