Portfolio Management advise
There is some advise that you keep getting from the media. You have heard it so many times that you know that it is correct (or the person who is giving, the journal, the channel, all of them believe)…but most people do not know how to use it. So I call it brilliant, but completely useless advice:
1. When in equities, buy low and sell high.
2. When everybody is selling, you should be buying and the reverse….
3. Avoid companies with dubious management.
4. Diversify equity exposure across 4-5 sectors.
5. Diversification is a protection against ignorance – Warren Buffet.
6. Commodity investing!
7. Avoid penny and Z category stocks
8. Go to a professional. Do not churn your portfolio. (Will anybody tell me what is an Oxymoron please?)
9. Unit linked insurance is a good investment
10. Rebalance your portfolio every quarter. Also read 8.
11. Get the macro picture right before investing.
12. If you spent 10 minutes on finding what will happen to the economy, you have wasted 7 minutes. – Peter Lynch.
13. Stock prices have fallen, try averaging!
more will follow….
Muthu
Sunday – No philosophy?
linusr
“13. Stock prices have fallen, try averaging!” – shouldn’t stop loss be followed instead of averaging?
subra
one of the biggest reasons why people lose money in equity markets is they do not know whether they are trading or investing. Stop loss is a trading strategy. Averaging is an investment strategy.
IMportantly it is possible that you use stop loss in investing also – but that could depend on too many factors. It could also be a time stop loss.
Sanjay
2nd point is very intereesting. In any transaction, if there is a seller, there has to be a buyer. So 2nd point is technically impossible. It is actually trying to talk about valuation.