I try to be disciplined. I start with what may seem to many as vague rules, but there is generally a price to pay for failure to abide by them. They should apply to buy and sell decisions.
1. Don't allow emotions to take control. Especially fear. Never do today what you wish you had done last week or month. Don't panic on a bad earning reports and dump a stock. Don't be greedy (get FOMO) and chase over-valued stocks with large buys. If you missed your chance to sell or buy, perhaps it's time to re-evaluate the stock, then move forward rationally.
2. Don't fall in love with a stock so much you get in denial and ignore important things. If the dividend is in great danger of being cut on the slightest bit of " bad weather", I look for the exit and try to beat the rush. It's OK to take an occasional loss, but it must be based on proper research. Maybe the story has changed longterm, or I simply just paid too much? I often tell the story of stubbornly holding onto MSFT, CSCO, INTC and PFE for decades after the 90's bubble popped. I think three of them have still not fully recovered. I could have accepted my mistake and bought about anything that wasn't insanely overvalued. Yeah those examples sound outrageous if you bought them any other time.
3. I follow valuation rules, but try to be very patient with blue chip DGI stocks. If they far outrun themselves I try to trim gradually, rather than cash out. Or use covered calls which doesn't always look good in hindsight. I try to never be greedy and sometimes that leads to trimming the winners. I won't go broke taking a profit in a tax deferred account. I move on and find the next deal.
4. I compartmentalize my port and try to treat DGI stocks as long term holds, current income stocks as income stocks, speculative stocks as appropriate. It's not so easy to always keep things as they should be.
5. It's my opinion that blindly buying and holding a large amount of stocks is a recipe for under performing the S&P 500. That's OK if you are here for the entertainment, and I do enjoy this. My investment goals are risk adjusted at this stage of my investing life. I will sell as appropriate and if I underperform the index so be it. It's important to me that I outperform when the sky is black. Some famous old guy said "don't lose money".
6. Never be cashless is another rule I follow. That will help you recover from other mistakes at some point. I will occasionally trim to keep cash where I want it.
Generic rules for sure, but they are working for me when I get it mostly correct.
1. Don't allow emotions to take control. Especially fear. Never do today what you wish you had done last week or month. Don't panic on a bad earning reports and dump a stock. Don't be greedy (get FOMO) and chase over-valued stocks with large buys. If you missed your chance to sell or buy, perhaps it's time to re-evaluate the stock, then move forward rationally.
2. Don't fall in love with a stock so much you get in denial and ignore important things. If the dividend is in great danger of being cut on the slightest bit of " bad weather", I look for the exit and try to beat the rush. It's OK to take an occasional loss, but it must be based on proper research. Maybe the story has changed longterm, or I simply just paid too much? I often tell the story of stubbornly holding onto MSFT, CSCO, INTC and PFE for decades after the 90's bubble popped. I think three of them have still not fully recovered. I could have accepted my mistake and bought about anything that wasn't insanely overvalued. Yeah those examples sound outrageous if you bought them any other time.
3. I follow valuation rules, but try to be very patient with blue chip DGI stocks. If they far outrun themselves I try to trim gradually, rather than cash out. Or use covered calls which doesn't always look good in hindsight. I try to never be greedy and sometimes that leads to trimming the winners. I won't go broke taking a profit in a tax deferred account. I move on and find the next deal.
4. I compartmentalize my port and try to treat DGI stocks as long term holds, current income stocks as income stocks, speculative stocks as appropriate. It's not so easy to always keep things as they should be.
5. It's my opinion that blindly buying and holding a large amount of stocks is a recipe for under performing the S&P 500. That's OK if you are here for the entertainment, and I do enjoy this. My investment goals are risk adjusted at this stage of my investing life. I will sell as appropriate and if I underperform the index so be it. It's important to me that I outperform when the sky is black. Some famous old guy said "don't lose money".
6. Never be cashless is another rule I follow. That will help you recover from other mistakes at some point. I will occasionally trim to keep cash where I want it.
Generic rules for sure, but they are working for me when I get it mostly correct.