I suspect I’m not alone in having my Stocks and Shares ISA portfolio well and truly walloped by the Russia/Ukraine conflict. In fact, I estimate the total value of my holdings is now down around 30% from the start of 2022.
Thanks to my Foolish mentality — and the fact that my problems are tiny compared to those of people in Ukraine — I’ve generally succeeded in taking this not-insignificant wobble in my stride.
Here’s what I’ve been doing
First, I haven’t sold a single thing. Yes, there’s certainly no guarantee that markets won’t dip lower in the months ahead. Then again, I have no way of knowing whether this will be the case in advance. Getting out now may help stop the bleeding but it will also leave a (costly) financial bloodstain. In other words, it merely turns what is only a potential loss into a real loss.
Second, I’ve taken a quick look at whether anything has truly changed with regard to stocks I own. Without exception, this is thankfully not the case.
Sure, there are some significant headwinds. For example, one of my favourite businesses — Greggs — has fallen heavily on news it might need to raise prices for the second time this year due to rising costs. That’s unfortunate, but I highly doubt the sausage roll seller now faces an exodus of customers compared to businesses devoted to selling big-ticket items. And will Greggs still face this challenge in a few years? I suspect not.
This brings me to a third thing I’ve been doing, namely adding to my watchlist of stocks I’d be tempted to buy at current levels. Right now, Games Workshop, SDI and XP Power are all in my sights. Whether I end up pulling the trigger is dependent on having available funds to do so, of course. Regardless, I always keep this list running in good times and bad. This should mean that my rationale for investing is solid and I’m not making any impulsive purchases.
My last action is both simple and highly effective. Not checking my portfolio at all.
To be clear, this is not the same as sticking my head in the sand. I know full well that a good chunk of my paper profit has gone up in smoke in recent weeks. But if I know I can’t change the situation, the next best option is to learn to accept it and do something far more productive. This could include finding ways of raising extra cash which can then be deposited in my Stocks and Shares ISA.
That last point is particularly important at this time of the year. After all, the ISA window closes early next month. Whatever of my £20,000 allowance I don’t throw at this tax-efficient savings account will be lost forever. That really matters over the long term, given the wonder that is compound interest.
It goes without saying that there are far more important things going on in the world right now than volatile share prices. Even so, I remain convinced that ‘this too shall pass’ just as all stock market crises have.
For someone not planning on touching his Stocks and Shares ISA for a couple of decades, that simple mantra is good enough for me.