Everything in One Stock?
Investing is hard and risky. You could lose a ton of money. The more investments you have, the more diversified you are. However, there are some negatives to owning a lot of different stocks.
- You tend to have small position sizes which can cause you to invest in stocks that might not be your top convictions
- Your research can get sloppy because you are only investing a small amount and if it doesn't work out you have a lot of other positions
- You end up getting very similar returns to the overall market but with more volatility which can cause you to sell more often
- Your research can get sloppy because you are only investing a small amount and if it doesn't work out you have a lot of other positions
- You end up getting very similar returns to the overall market but with more volatility which can cause you to sell more often
What if instead, for every stock you invested in you pretended you were investing every dollar you had into it?
- You would be extremely cautious about which stocks you invested in and the number of them
- Instead of investing in the 35th best idea you have, you will keep your position to a relatively small amount
- You will do so much research on the company because you have real skin in the company's prospects
- You would be more of an actual owner in the business rather than someone trading a ticker online
- You would know exactly how much the company should be worth so when the price falls instead of selling, you add to your position
- Instead of investing in the 35th best idea you have, you will keep your position to a relatively small amount
- You will do so much research on the company because you have real skin in the company's prospects
- You would be more of an actual owner in the business rather than someone trading a ticker online
- You would know exactly how much the company should be worth so when the price falls instead of selling, you add to your position
When I first started out, I used to think it was best to own a bunch of individual stocks, and maybe some of them will do well. The older I get I realize that is not as easy as it sounds. I'm now more in the camp of owning a few positions and keeping a close eye on them. Do as much research as possible and learn every day.
What camp are you in?
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
