If we could see people’s mental body, it would be a hilarious experience. Someone would have giant hands with more athletic personality, someone with less will power will appear pale, another person with can appear to possess a tiny stomach but a enormous head.
Worst part of all is the late diagnosis of such problems until its hopefully not too late. We are all experiencing one form or other disease if not physical then partly mental and one could say definitely some spiritual.
One of the lessons I want to nail down pertains to exiting a stock. Most season players will offer you explanations like:
– When original premise of buying stock has proven wrong
– When you need money for yet another security which is more attractive
– Fundamentals of the company have deteriorated.
What confounds me is HOLD rating on a stock. What is HOLD in the name of bull ! its a BUY or SELL.
Those same people will make the following statement, time and again.
“Those invested at cheaper rates may continue to hold the stock but do not make new entry at this price”.
Lynch makes it crystal clear when he writes, “If you are not going to buy more of a certain security, you should be selling it”.
Therefore every single day/quarter the stock has to be evaluated for a BUY or SELL against available opportunities, there is no HOLD. I know I have strong opinions and other techniques may work but this works for me.