There's No Need To Diversify If You Buy The Right Stocks!
Let's pause for a moment and consider this possibility: Imagine that from this point in time forward, you are never going to buy another stock again, if you thought there was a reasonable chance that you might have to sell it in less than ten years.
No matter what happened, be it wars, inflation, recession... you've decided that you aren't going to sell unless it's absolutely necessary, a matter of financial life or death.
Under that scenario, investing would become a whole new ballgame. You'd be focused on making the best possible investment decisions you could make. In fact, you might even stop investing altogether for several months while you brushed up on key investment concepts, and learned a lot more about accounting and finance. (And incidentally, that is not a bad idea!)
You would be tightly focused on investment success as never before, along with the accompanying peace of mind that you would gain from that move. In addition, you would do away with all short-term considerations, and you'd stop trying to anticipate the market. Instead, you would finally get down to the serious business of taking the best possible advantage of the opportunities the market delivers to us every few years in the form of lower stock prices.
Warren Buffett once said that investors should behave as though they were given a punch card at the beginning of their investment careers. And each time you buy a stock, you would punch a hole in the card. When you've punched twenty holes in the card, you're done buying stocks for the rest of your life.
Now that may sound just a bit extreme, but the basic idea behind it is that of being highly selective in your investment decisions, which is exactly what investors should be doing these days.
What investors need today is to invest with a capital "I." No speculation. No trading. Understand that when you add a new stock to your portfolio, you then become a part owner in that business enterprise. And hopefully, you will have made that new investment only after having done the most thorough possible research. Buying a new stock ought to mean that you've found a business that you really want to be in. To invest any other way would be to play the loser's game which does not represent a winning approach to investing!
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No matter what happened, be it wars, inflation, recession... you've decided that you aren't going to sell unless it's absolutely necessary, a matter of financial life or death.
Under that scenario, investing would become a whole new ballgame. You'd be focused on making the best possible investment decisions you could make. In fact, you might even stop investing altogether for several months while you brushed up on key investment concepts, and learned a lot more about accounting and finance. (And incidentally, that is not a bad idea!)
You would be tightly focused on investment success as never before, along with the accompanying peace of mind that you would gain from that move. In addition, you would do away with all short-term considerations, and you'd stop trying to anticipate the market. Instead, you would finally get down to the serious business of taking the best possible advantage of the opportunities the market delivers to us every few years in the form of lower stock prices.
Warren Buffett once said that investors should behave as though they were given a punch card at the beginning of their investment careers. And each time you buy a stock, you would punch a hole in the card. When you've punched twenty holes in the card, you're done buying stocks for the rest of your life.
Now that may sound just a bit extreme, but the basic idea behind it is that of being highly selective in your investment decisions, which is exactly what investors should be doing these days.
What investors need today is to invest with a capital "I." No speculation. No trading. Understand that when you add a new stock to your portfolio, you then become a part owner in that business enterprise. And hopefully, you will have made that new investment only after having done the most thorough possible research. Buying a new stock ought to mean that you've found a business that you really want to be in. To invest any other way would be to play the loser's game which does not represent a winning approach to investing!
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posted by Bob Moser at
7:12 PM
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