BlogSharesight Features & Tips

4 ways to navigate market volatility with Sharesight

by Doug Morris, CEO, Sharesight
Disclaimer: This article is for informational purposes only and does not constitute a product recommendation, or taxation or financial advice and should not be relied upon as such. Please consult with your financial adviser or accountant to obtain the correct advice for your situation.

Like many investors right now, I’m watching the value of my portfolio fall, but as a buy and hold investor who prefers quality businesses, I’m on the hunt for value. As JP Morgan said: “in bear markets, stocks return to their rightful owners.”

However before you pull the trigger on any new holdings, it’s important to take a step back and analyse what’s going on with your portfolio. And unfortunately your broker’s reports or a spreadsheet won’t cut it.

Experienced investors understand that now is the time to put your trust in an award-winning solution like Sharesight that is purpose-built for their needs.

4 ways to navigate market volatility sharesight

Here are four ways Sharesight can help you navigate the market right now:

Detailed performance reports

Given the markets at the moment, most of us are looking at short term capital losses. That’s why understanding the impact and contribution that dividends provide to your portfolio is really important. If you’ve been investing in a holding for a while, the impact of dividends over that period may soften the blow of the capital losses you’re currently seeing. Take a look at the summary on the Portfolio Overview Page or the Taxable Income Report in Sharesight for more information.

Dividends

Don’t forget about foreign currency. If you’re an Australian investor looking at a safe harbour stock such as Microsoft, you need to understand the FX impact on your cost base. Sharesight breaks out the currency impact on your return on the Overview Page and it’s also detailed in the All Trades Report.

Currency Gain

Personally, I rely on the Contribution Analysis Report because it gives me a relative feel for how all of the drivers of my performance interplay with one another.

Contribution Analysis

Benchmarking

Many investors compare their portfolio returns to the market index in their investing country. That’s a sensible check-up. Just know that when you see market performance quoted on TV or in the financial news, you’re looking at a basic “price return” chart, which won’t match the real money experience of investors.

It’s important to compare your portfolio with an apples-to-apples benchmark. This is how the Sharesight benchmarking feature works because it assumes a common investment date, amount, and fees.

Personally, I use benchmarking as a “plan B” to the decisions I’ve made as an investor – not just as a check on the market. I evaluate my benchmark as a realistic alternative to my actively managed decisions.

Benchmark

Use capital losses to your advantage

This depends on what your country is (for tax purposes), but in many places capital losses can be used to offset either capital gains or even ordinary income.

The Sharesight Capital Gains Tax Report (available in Australia and Canada) will show you both long and short term capital gains and losses, while the Unrealised Capital Gains Report (Australia only) does the same but for unsold positions – think of this like a “what-if I sold these shares” report.

Personally: I check my capital losses to see how long something has been a loser - I’m trying to not hold on to poor performers for too long.

UCGT2Sharesight’s Unrealised CGT report

Portfolio sharing

The best investors are informed investors. If you’re wanting a second opinion on your portfolio, start the conversation by sharing access with a trusted advisor, family member, or friend. This is available to all plan types in the Settings > Portfolio Sharing menu.

Personally, I’ve (re)shared my portfolio with my wife. While I act as household portfolio manager, I’m using Sharesight to help illustrate the recent market volatility – and ensure she understands it’s not entirely my fault!

Portfolio Sharing Sharesight

Be an informed investor with Sharesight

In these turbulent times, it’s important to be an informed investor. These 4 tips are a great start to making the most of your portfolio, but are only just the beginning. With Sharesight you can:

Sign up for a FREE Sharesight account and get started tracking your investments today.

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