01 August 2013

Biggest Concerns in Holding a Portfolio

In the stock market, there are normally 3 ways we can do for a counter: Buy, Hold, or Sell. 

To me, I prefer concentrated portfolio, with maximum 5 counters in my stock portfolio as my portfolio is still considered relatively small. It is advised to hold lesser counters for retail clients due to few reasons:

1. The time spent on reading counters may not be long enough. It is better for a client to start with his portfolio on selecting counters he is familiar with instead of just following the public. 

2. Lesser transaction costs involved if the client just concentrates on few counters. 

3. Higher chances to win if more efforts put on limited number of counters. You may select the counters that have a higher opportunity to win over a long time. 

Before you buy a share, you must have a reason why purchase it. After you purchase, now the question is how long you want to hold for the counter. For Value investor, they may wait for the share price to go up to intrinsic value they set prior the purchase. For Growth investor, they may have more homework to do, to calculate again the intrinsic value every time the company reports the latest financial result. 

There are so many choices in the market, and you may be lured to switch frequently. However, my thought is that, as long as you can average down on the shares price (You should be happier if the price drops further, it means that the safety of margin could improve further, and you can purchase more). 

I believe the main reason why we still hold the shares is due to the counter is still not fully priced at its intrinsic value. And you should buy more if the share price goes down further, instead of another way around. 

No comments:

Post a Comment

Related Posts Plugin for WordPress, Blogger...

View All My Posts Here