The basic idea for this account is simple: buy and hold.
Make a few choices and leave them alone.
- Don’t invest in individual stocks if volatility makes you lose sleep.
- If you must be a stock picker, measure your performance. Then you’ll know when to fire yourself.
- When you find a good stock, keep it.
- Compare what you sold with what you bought. If nothing else, this will be a great deterrent to portfolio turnover. This is a tough test that works to renew humility. It may scare you out of stock picking altogether.
- Whether you pick your stocks or have someone do it for you, reviewing decisions is vital due diligence. It’s the only way to learn from mistakes.
- Mistakes come with the territory. Agonizing takes time and doesn’t make money. If you can’t let your errors go, take stock picking off your hobby list.
By Scott Burns
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