07-12-2013, 08:35 AM
I'll say right up front that I agree with you both. Worrying about maintaining exact 2, 3, or 5 percent positions in each of your holdings is needlessly worrisome, leads to counterproductive portfolio churn, and probably hobbles your long-term results because you are forced to put money into less attractive stocks.
But I think you nailed it Horace in saying:
I think some people are nervous investors, and we have to admit that the market can take even the strongest minded people on one hell of an emotional ride, especially when your nest egg is on the line. So I think these hard and fast rules help some people have a sense of control and certainty. And even though we do not agree with the approach, if it enables them to move towards their goals instead of buying and selling willy-nilly, I guess it could be seen as a good. At least they have a plan and are sticking to it, which is more than can be said for many "investors."
Tom
But I think you nailed it Horace in saying:
(07-11-2013, 09:49 PM)Horace Cugle Wrote: I get that it's a methodical, unemotional approach and there's safety in numbers.
I think some people are nervous investors, and we have to admit that the market can take even the strongest minded people on one hell of an emotional ride, especially when your nest egg is on the line. So I think these hard and fast rules help some people have a sense of control and certainty. And even though we do not agree with the approach, if it enables them to move towards their goals instead of buying and selling willy-nilly, I guess it could be seen as a good. At least they have a plan and are sticking to it, which is more than can be said for many "investors."
Tom