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Portfolios 301: How to Monitor Your Portfolio, Part 1

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1.
What can happen if you ignore changes that occur in your portfolio?
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Both of the above. Ignore changes in your portfolio and you may end up with a portfolio that's very different from the one you originally put together.
2.
What is the danger in letting the strongest performers of your portfolio stay in there and continue performing, as opposed to regular rebalancing?
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It increases the overall risk level, which can magnify losses during a downturn. And that means you might not meet the goals for which you are investing in the first place.
3.
The best way to put an investment's performance into context is to compare its returns to those of other investments in your portfolio.
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False. The best way to do it is to compare its returns to an appropriate benchmark.
4.
The Internet can send you alerts to tell you when there are big changes in your investment holdings.
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True. Some financial Websites will send you such alerts if you sign up for them.
5.
Which of the following would be valuable to do before you start monitoring your investment portfolio?
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Both of the above. Both of these are wise things to do. Though you can develop your monitoring procedures on your own, creating an investment policy statement would accomplish that as well as additional objectives.