I have been investing since I was 18 and have seen 3 major corrections in the market. My issue is that I am tired of seeing the large swings that some of my stocks are going thru. Yes I understand they were overbought or oversold, However I have also seen some of my companies go completely under. So how do you stop a major correction from killing your portfolio? Portfolio protection is what I was in search for. I came across a book about simplifying your life.
One tip in the book that I found useful was to consolidate your portfolio and use 2 index Etf to do the same thing your portfolio is trying to accomplish. So I started my journey and found 2 etf's that cover the entire market (stocks and bonds)
First is (vti) vanguard total stock market etf. This low expense etf covers the whole market which means in layman's terms that it also will not fluctuate as much daily unless the WHOLE market moves one way or the other.
The second is (agg) ishares core total u.s. bond market etf. This low expense etf reflex's the bond market as a whole.
Some investors call this the 60/40 (60 percent stocks 40 percent bonds) and keep that ratio as equal by selling the high and investing it in the low) while this idea was a good path I chose to go a 50/50 mix.
As one creates a gain I will sell the gain and invest it in the loss of the other to keep them 50/50 or as close as I can. The one thing I like about this thought is both offer dividends. So I will be receiving income from the first month and every month it will increase.
This simple yet effective portfolio, will allow you to keep your eye on your prize.. which should be buying low and selling high. Also since you have 2 stocks vs the 30+ I had. its also much easier to maintain and simple to implement for the starting investor
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.