To The Moon

As the year draws to a close, I find myself facing a dilemma that many investors experience — the pullback in the markets is starting to create some turbulence in my portfolio. While the temptation to lock in profits might be strong for many traders, I’m in a different situation. Unfortunately, my current portfolio, which consists of two ETFs and three individual stocks, is still in unrealized losses. It feels frustrating to watch the value of my investments decline, especially when so many are advising caution or taking profits.

1. Market Timing vs. Long-Term Vision

It’s easy to feel the pressure to time the market perfectly when things seem to be in the red. However, history tells us that market timing is often a risky strategy. While I’m currently facing unrealized losses, I remain confident in the long-term potential of my portfolio. The ETFs I hold represent broad market sectors, and my stocks, though struggling now, have solid fundamentals. If I were to sell, I’d lock in my losses, whereas holding gives my investments a chance to recover — potentially at a more favorable price down the line.

2. Unrealized Losses Aren’t Realized Yet

One of the key distinctions I have to remind myself of is that unrealized losses are just paper losses until I sell. It’s tempting to panic and take action, but if I sell now, I make the loss real. It's important to ask whether my decision is driven by short-term emotions, like fear, or my actual investment strategy. Patience could prove more valuable than trying to minimize short-term losses.

3. Should I Be Taking Profits?

If I were in a different position — with profits in my portfolio — the decision would be easier. I'd likely be taking profits, especially with the end of the year approaching, which historically sees increased volatility and portfolio rebalancing. But because I’m in the red, the idea of “taking profits” feels out of reach. I need to remember that taking profits now doesn’t help me when I don’t have any. Instead, staying focused on the long-term potential and maintaining confidence in my investments might be a better route.

4. Market Pullback: A Temporary Setback?

Market pullbacks are a natural part of the investment cycle. After a strong rally, a pullback may be inevitable. This might be an opportunity to “buy the dip,” particularly if the assets I hold are still fundamentally strong. While it's tempting to exit before the end of the year to prevent further losses, pulling out during a pullback could mean missing out on a recovery. The real question is whether the pullback represents a temporary dip or a more prolonged downturn. If it’s the former, this could be an ideal moment to stay invested and ride out the volatility.

5. Emotional Investing: The Danger of Panic Selling

It’s important to check myself and see if emotional reactions are influencing my decisions. Fear and frustration can lead to hasty moves like panic selling, which rarely proves to be a wise decision in the long run. By focusing on the reasons I originally invested in these stocks and ETFs, I can ground myself and make decisions that align with my original investment strategy rather than short-term fluctuations.

6. The Risk of "Chasing the Bottom"

There’s also a risk when trying to time the market too precisely, especially when attempting to catch a “bottom.” While some may suggest that now is the right time to enter or re-enter positions due to low prices, nobody can predict exactly where the bottom is. This could lead to chasing losses if I try to time the market too aggressively. It might be better to stay the course with a diversified portfolio and let the market find its equilibrium in time.

7. Trusting the Process

Ultimately, what keeps me grounded is my belief in the long-term growth potential of my investments. The stocks and ETFs I hold are not just based on short-term speculation; they represent companies and sectors that I believe in for the future. I have to trust the process and be patient, knowing that markets move in cycles, and while I’m currently in the red, the long-term growth of these investments could significantly outpace any temporary setbacks.

Conclusion: Patience or Action?

While the pullback may seem discouraging, it could also offer an opportunity to stand firm or even take advantage of lower prices. I still believe in the future of my portfolio, and the best course of action may be to stay patient, avoid emotional decision-making, and remember that market cycles do eventually turn in favor of long-term investors.

So, am I just being unlucky, or is this a normal part of the investment journey? While it certainly feels frustrating in the moment, I’m choosing to hold on for now, knowing that good things come to those who can weather the storm with confidence and patience.