I started using M1 finance to invest weekly with a dollar cost averaging strategy. But , I notice a drawback with M1 finance, if I have 5 slices in my pie and I have a bad slice with loser stocks or etfs , my new dollars always gets invested into my weakest undervalued pie . This screws my dollar cost averaging as the other 4 pies are staving without fresh money going into them. Anyone noticed it and is M1 finance still a good long term investment platform?
Well the idea is you choose the companies based on their fundamental business and not on stock price. If you do that, then you do not worry about short term fluctuation. What it means is that when a good company is undervalued or the price is low, you are buying more of it. Whereas the overpriced stock is getting less fresh money at high price. M1 is built for long term investing and is not trading and it doesnt suit momentum trading. Provided you do not panic, when the high flying stocks go down, you get to buy them at lower price. Think long term and choose a good mix of companies. If you want to do momentum trading, use robinhood and follow the principles of Nicolas Darvas box theory. Works great and is simply awesome.
But as a beginner investors , 9/10 times I pick stocks that I’m greedy about . It sort of creates a hole in the portfolio ! And my weekly investments are just going down that hole
If you are interested in trading by riding the momentum, you are buying overvalued stocks with very questionable fundamentals. This can crash. It might be more suitable to have stop losses etc to minimize risk. Robinhood might be a better platform. On the other hand if you can be stable and not panic in face of heavy drawdowns and fluctuations, and you are confident in the long term growth of the company, you can accumulate these stocks in M1 in the face of mounting losses. Whatever you do , do not try to make paper losses permanent. As a word of caution, high flying stocks are good until they crash.