Open trading account 
A lesson in market psychologySome time ago Doug Kass at Seabreeze Partners emailed me. He and Bob Snyder of Cambridge Information Group were trying to locate a page out of an old Stock Trader’s Almanac depicting the typical thought process during a trade gone bad. The chart they were looking for first appeared in the very first Almanac in 1968. Then we resurrected it in the 2001 Almanac.
Figure 1 depicts our own modernized take of this age-old invaluable lesson in controlling your emotions when trading or making investment decisions. These comments are typical of those made during a market decline and rise. If you have ever said any of them, you are emotionally normal (in stocks, at least). But now you can be on guard should you ever utter them again. This reminder can serve to put you on notice that you have lost your self-control, and must reassert it.
Portfolio managementIn my opinion, most portfolios should consist of less than 40 open positions at any time; for most individuals a stock portfolio of less than 20 is sufficient and 5-10 holdings is likely as much as one individual can effectively manage. Consider employing and utilizing some of these portfolio management techniques. In my opinion, no one position should maintain such a large percentage that it determines the future of the portfolio. Consider investing across multiple sectors and generally no one sector should compose too much of the overall portfolio. When the investor’s economic and market outlook is strongly bearish (or turns negative), a more defensive posture could be instituted by limiting new buys, selling losers faster, tightening up stops and/or implementing some downside protection.
Finding proper entry points, trading around core positions, and having a sell discipline can be crucial to increasing the returns of the portfolio. Remaining disciplined, unemotional, and mitigating risk are some of the keys to investment success. Maintaining an unbiased and unemotional stock selection process and consistent portfolio management practices can help with achieving success. Most importantly, the ability to avoid bad behavior can be the difference between success and failure in the long run. Any one of the Seven Deadly Investing Sins in Figure 2 can be the ruin of an investment portfolio.
According to www.fidelity.com
Figure 1 depicts our own modernized take of this age-old invaluable lesson in controlling your emotions when trading or making investment decisions. These comments are typical of those made during a market decline and rise. If you have ever said any of them, you are emotionally normal (in stocks, at least). But now you can be on guard should you ever utter them again. This reminder can serve to put you on notice that you have lost your self-control, and must reassert it.
Portfolio managementIn my opinion, most portfolios should consist of less than 40 open positions at any time; for most individuals a stock portfolio of less than 20 is sufficient and 5-10 holdings is likely as much as one individual can effectively manage. Consider employing and utilizing some of these portfolio management techniques. In my opinion, no one position should maintain such a large percentage that it determines the future of the portfolio. Consider investing across multiple sectors and generally no one sector should compose too much of the overall portfolio. When the investor’s economic and market outlook is strongly bearish (or turns negative), a more defensive posture could be instituted by limiting new buys, selling losers faster, tightening up stops and/or implementing some downside protection.
Finding proper entry points, trading around core positions, and having a sell discipline can be crucial to increasing the returns of the portfolio. Remaining disciplined, unemotional, and mitigating risk are some of the keys to investment success. Maintaining an unbiased and unemotional stock selection process and consistent portfolio management practices can help with achieving success. Most importantly, the ability to avoid bad behavior can be the difference between success and failure in the long run. Any one of the Seven Deadly Investing Sins in Figure 2 can be the ruin of an investment portfolio.
According to www.fidelity.com
