So ... Are You Married To You Stocks?

Are you married or will you marry? If you are married, surely I bet you won't like the divorce!

So ... are you married to your stocks? If you are married to your stocks, I am betting that you won't like the divorce (SELL)!


http://createwealth8888.blogspot.com/2009/07/time-in-market-or-timing-market.html <--- If you may want to read on Time In Market or Timing The Market The primary reason to buy a stock is to make a reasonably high rate of return on capital (ROC) at an acceptable level of risk to you.

You have to determine what is your high rate of ROC and don't be too greedy? Once you have fulfilled the reason of buying , don't you think it is better to recover your capital as soon as possible. You can always buy back the same stock when you can't find better ones to buy.


So how do you tell that you are married to your stocks and deeply in LOVE with them?

1. You love their dividends. You don't see any reason to ever sell this stock as the stock gives you such a good relative yield. You are madly in love and you don't even have target price to sell it to recover some or all capital.

2. You love the products that the company make. You love the management style. You love the company culture. You love how the company beats their competitors. You are like MacDonald ads: Loving It!

3. You did a lot of research on this company before buying its stock. You are so convinced that the company will continue to grow, and the management style and skills will continue to be effective in the future. (When the company owner who is also the CEO, and there is no clear line of succession plan, this company is damn risky.)

4. You are convinced that it is only just 1-2 bad years when the company didn't do well. You think the company will certainly get better in the near future and fail to realize that no company is totally immune from obsolete business model due to ever changing economic environment and competitive landscapes.

5. You keep averaging down whenever you have more capital available. You are convinced that when its stock price gets lower, the margin of safety gets better. You don't even bother to consider the fact that it is becoming heavier in your portfolio. You don't even bother to look at other stocks that may be as good as this one or even better.

So don't treat your stocks as your wife, but treat them as your pillows. Pillows are good to rest your head and sleep soundly on them. Can you sleep without your wife? I bet you can sleep without your wife when you are on business trip or doing your in-camp training. Can you really sleep without pillow? I can't! http://createwealth8888.blogspot.com/2009/04/pillow-stocks-strategy.html

So what is your PRIMARY reason to buy the stock? Cheers!