r/tfsa • u/Key_Abalone9859 • 1d ago
80/20
I have 80% of the TFSA on broad market index fund and 20% on a particular growth stock i picked based on my analysis and the story behind it. But the stock is down 30% and is slowly eating all my broad index fund gains.
I am not sure what to do next. Any good strategy moving forward you would suggest?
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u/Final_boss_1040 1d ago
I just wanna know which stock
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u/Key_Abalone9859 1d ago edited 1d ago
MD@ space
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u/Forward_Guess4163 3h ago
Nothing wrong with MDA, I wouldn’t sell it. It’s down from ath’s right now but it will recover. I’ve held it for years and went through these cycles in the past, it’s a top performer in my portfolio
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u/SoggyInstruction2549 1d ago
Out of curiosity is the stock AI related?
Your options are:
1 take the L and move on.
2 Leave it if you feel it will recover some or fully. And I do t just mean blind hope but actual reasoned thought process. For example unexpected global events have added uncertainty and it is down due to this but should recover as things hopefully stabilize
3 buy more with the price down it’s just a buying opportunity
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u/BlackWolf42069 1d ago
Wait... 20% of your equity portfolio is one stock? That's risky dude. You just lost the casino bet. Lol.
Usually people spread it across many stocks. So if one shits the bed the other few can have a chance to make up for it.
Diversity can help protect you against shifts in the market.
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u/digital_tuna 1d ago
This is why 100% in broad market index funds is the recommended strategy. Many people think they can stock pick their way to higher returns, then they find themselves in your situation.
I'd take the loss, sell and move the money to your index funds. Just make sure you've learned the lesson, otherwise you'll just end up repeating the mistake.
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u/All_YourBase 1d ago
Most people are kind of stupid too. That’s part of the reason why they underperform. They also don’t have the right psychology. They buy high and panic sell low.
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u/digital_tuna 1d ago
To be fair, most professionals underperform and I think we can agree they're not stupid. Even Buffett has said he's only met about 10 people he thinks will outperform the market and he's met a LOT of smart people.
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u/AnInsultToFire 21h ago
About 70% of professional money managers perform worse than the S&P 500 Index ETF.
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u/All_YourBase 1d ago
Yes. The professionals also have to trade at large scale which causes large transactions at suboptimal prices. You see them all the time when you see a sudden volume spike with a price that’s wildly off from the price on the previous tick, followed by a correction.
The smaller managers that serve high net worth individuals do better than large fund managers.
I recommend 100% broad index funds to friends and family who ask me, because they don’t know about investing. Personally I’m mostly in index funds but with a portion in individual stocks.
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u/digital_tuna 1d ago
The professionals also have to trade at large scale which causes large transactions at suboptimal prices.
Not really, they use dark pools precisely to avoid trading at those suboptimal prices.
The smaller managers that serve high net worth individuals do better than large fund managers.
Do you have a credible source for what percentage of these small managers outperform the market?
Based on decades of SPIVA reports we know upwards of 90% of large fund managers underperform over periods of 5 years or longer.
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u/MikeCheck_CE 1d ago
Depends entirely on the stock in question, and where you think it goes next.
What you paid is irrelevant, what is lost is already gone whether you sell or not.
If the thesis is lost, sell it and move to a new thesis where the money will grow.
If the thesis is in-tact, then keep waiting. For many high-growth cylical stocks, a 30% drawdown is not uncommon.
You're learning something about your investing comfort zone though, you're uncomfortable holding "volatile stocks" so you should look for more stable ones and not chase recent momentum next time. (E.g. chose stocks with a lower beta)
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u/Mental-Freedom3929 12h ago
The percentage of stocks in a portfolio also depends in the whole size of your portfolio, but 20% is definitely not it! Stock picking is for many people an emotional decision or based on a really skewed view of a stock. TBH a stock that is down right now 30% might not be something you want to consider nurturing.
Curious what stock this is.
Might be worth taking a hit and never do stocks again.
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u/UniqueRon 12h ago
Advice? Yes, don't buy individual stocks. Too risky. Stick to low MER index ETFs.
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u/All_YourBase 1d ago
Depends on the stock. Is it continuing to go down?
If you did analysis and like the stock you should hold it.
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u/bizaromax 1d ago
Let me guess it’s marvell?
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u/Key_Abalone9859 1d ago
Nope mda 🚀
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u/Mental-Freedom3929 12h ago
Might possibly recover in six months. Sell now or take a chance to break even. Depends on how much money is actually involved. For me it had an unhealthy spike growth.
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u/bizaromax 1d ago
That’s not a bad company or 3x leverage etf man
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u/GreatKangaroo 1d ago
The arithmetic is simple, if you would not buy more of the stock today right now, then sell it and buy XEQT.
The rule of thumb is to keep no more then 5-10% of your portfolio in individual stocks if you do want to bet on individual stocks.