Manage Your Portfolio

Once you've made some investments, it's crucial to know how to review them in your brokerage account and ensure they're tracking to your overall portfolio objectives.

Understanding Your Assets

Like cash in a bank account, assets in a brokerage account include a total balance by asset type. The investment assets in your portfolio are known as "holdings," each of which has a unique position on a financial security.

What an Equity Position Includes

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Market Value

The market value of your position reflects the total value of your investment based on most recent share price of that asset.

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Cost Basis

This is the amount you originally paid for a specific lot of shares, or entire position, which is later used for calculating taxes on gains.

Long Versus Short

Though not advisable for beginner investors, you may take a "short" position in a stock, which gains when its price goes down.

Share Lots

Your shares are organized by lot, or group of shares purchased together, which is important for taxes as you buy and sell over time.

Gains and Losses

The difference in share price for sold shares is reflected as a "realized" gain or loss while the equivalent for unsold shares are unrealized.

The Types of Investment Return

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Asset Appreciation

When the price of your shares rises above the price that you purchased, it becomes an unrealized gain and income, once you sell.

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Dividend Payouts

Some stocks offer dividends to shareholders, typically paid out quarterly for each share you own, and either in cash or more stock.

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Coupon Payments

Similar to the interest you can earn on a savings account, bondholders receive interest in the form of "coupon" payments.

Monitoring Performance

It's your job to monitor holdings to ensure that they are adhering to your investments objectives related to risk and expected return.
While performance varies considerably by sector and economic phase, returns of 8 to 10% per year are historically common for stocks and the yields of investment-grade bonds often range between 2% to 4%.

What Makes Stock Prices Move

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The announcement of a new product line, change in corporate management or pending lawsuit all impact public outlook on the stock. 

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Earnings Reports

When company financials are shared quarterly, stock prices react sensitively to deviations between analyst forecasts and actual figures.

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Analyst Opinion

Analysts maintain ratings toward publicly-traded stocks and may upgrade or downgrade their outlook, moves that can affect share price.

What Else Can Affect Stocks

Industry Outlooks

Industries heavily-reliant on certain economic factors, like the price of crude oil for auto companies, see their stocks greatly impacted.

Economic Cycle

"Bear markets" with low consumer spending make it hard for even strong companies to grow, thus constraining their equity potential.

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Don't sell just because the market dislikes it today

Since your stock's performance can be impacted by factors other than the company itself, don't let short-term price fluctuations distort your outlook on the investment. If your shares suffer a significant price decrease, first understand the reason behind the decline and whether it could change the longer-term financial health of the company or its stock.
While selling a portion of your shares is a smart way to limit big-time losses, know that stocks very regularly "course-correct" after the market initially overreacts to some type of news or analyst rating.

You're ready to do it yourself.