Market Volatility - How do you handle it?

[maniac]

It is emotionally very difficult to accept that your portfolio is showing a return of -50%, even though it may consist of purely unrealized losses. I have been through this myself during the market nadir back in 2009, when I was about -60% down, and I confess the feeling was pretty terrible as our brains are not equipped to handle such financial "pain".

In theory, it is easy to assert that one will buy when one is 50% down in order to average down on a losing position; but when the crap hits the fan, only those who are very disciplined and have a lot of mental fortitude are able to make the move to average down. Of course, having a strong mental framework helps a lot in deciding which companies one should average down and buy more of.

One should note that the greatest enemy in investing is not the technical and knowledge aspects, it is the EMOTIONAL aspect.

For me, it is bad emotionally if it occurs at the earlier stage of the holding period and the companies are bad - I will be uncertain whether my evaluation is still good and whether I should buy more. But if I hold the companies over a longer period of time, and they are decent ones(i.e. they would have appreciated and provided much dividends), I will be dealing with - earning less rather than making a loss - this is much easier to manage. So, for me the longer I hold the higher chance of me overcoming the emotional aspect of investing.

cheers

[cookieguy]

just'd like to ask opinions here on how do u deal with market volatility?
it's always easy to say that one would buy and hold, but when market volatility starts it's hard to keep 1's nerve still against fluctations (e.g. when market turns bear, value at risk)

btw, i'd think now is a poor season to do buy & hold due to an optimistic / complacent market as i observed that period of optimisms (rallies / bull runs) - characterised by a low VIX reading
http://finance.yahoo.com/q/bc?s=^VIX+Basic+Chart

are almost followed by volatility

currently i stick with 'low beta' stocks like telcos which i presume has a more stable cash flow and hence less fluctations

Always believe in yourself and turn your attention to other personally rewarding activities, for example go for a jog or swim

[nsengkia]

You could try focusing on something else.
For myself, I keep track and update my portfolio once a week but my main "keeping score" is based on EPS per counter multiplied by the number of shares held. This changes very slowly only when results are out.
I also monitor metrics such as overall portfolio weighted P/E, Price-to-Book etc. I focus on keeping P/E (6.3) and P/B (1.06) low, earnings yield (15.8%) and weighted ROE (16.7%) high and not focus on actual market "value". When the market falls, my metrics go up and I am usually happy that I can add even more shares on sale to my portfolio.
I find this helps.
Cheers!