Putting all your eggs in one basket

[highonlife]

So i have been reading this forum for a while now. And this is starting to worry me about the people who visit it.
Whilst I respect and admire the successful people who are on this forum, (including Savant sir), one needs to remember that they are also human and can make mistakes. Instead i am seeing posts asking about holding 20-30 lakhs of stocks for 2-3 years. in a single company.
I have also read so many posts about people who are starting out trading, and invest all their money in 1-2 stocks and are wiped out.

Remember, no one is god. Even if a stock is fundamentally undervalued, and should rise...there is no guarantee that it will. Many good companies have stayed undervalued for years and years (due to market manipulation, and due to people not appreciating the company). Remember....."Everything is worth that which someone will pay for it".
If the stocks you own cant be sold , then they are worth nothing, though you may own shares of Berkshire Hathaway.

My final advice is this. NEVER EVER EVER EVER put all your eggs in one basket.
You will hit a sixer once in a while, but more people get out to skying the ball, rather than clearing the ropes.
It is my fundamental belief that no single position in your portfolio should ever exceed more than 5-8% of your portfolio value. EVER.
8% only if you are keeping a very very tight stop loss. all it will take is one Satyam or one Suzlon to wipe out your earnings.
And even if it isnt one of those, it could be anything from War, famine, to an act of God.

We all want to be the person who buys shares of DLF at 10 rupees, and 10 years later is a crorepati. But for those of you who live in Mumbai, there is the old saying, ...The stock market has sent more people from Cuff Parade to Borivali, than the other way around.

Trade Smart people......trade smart.

 

[magnet]

Agreed on your point

1 note::Suzlon doesnt have bad funda all .Thing they facing right now is debt crisis plus oil price keeping down hence no investor putting money in windmills but buying oil..ence they unable to coup up....For long term it will be a best bet to buy below 50 and seeing 100% return in 2-4 years time

And Regarding Satyam in future it will merge in tech mahindra....But all the litigation may take upto 4-5 years to settle ..The company has 10000 crore turn over (business)and its trading cheap..

But ya as saId never to put all your eggs in one basket

 

[highonlife]

Agreed on your point

1 note::Suzlon doesnt have bad funda all thing they facing right now is debt crisis plus oil price keeping down hence no investor putting money in mills but buying oil..

And Regarding Satyam in future it will merge in tech mahindra....But all the litigation may take upto 4-5 years to settle ..The company has 10000 crore turn over (business)and its trading cheap..

But ya as saId never to put all your eggs in one basket

Agreed , but imagine if you had put all your money in them, and lost 90%. does it matter that in 4-5 years they will come back to normal?
Everyone will make bad trades. I take stop losses every few days. but Discipline is more important than brilliance sometimes.
I just had to point it out because i read so many posts where people want 1-2 stocks to invest in. Or say that they have lost all their money in stocks in a few months. This is just stupid investing.

 

[magnet]

Agreed , but imagine if you had put all your money in them, and lost 90%. does it matter that in 4-5 years they will come back to normal?
Everyone will make bad trades. I take stop losses every few days. but Discipline is more important than brilliance sometimes.
I just had to point it out because i read so many posts where people want 1-2 stocks to invest in. Or say that they have lost all their money in stocks in a few months. This is just stupid investing.

Ya but if someone ask me where to invest such big amount I only says invest in gold and forget....Why to take risk??lolz

It wont make u rich but ya your money wont erode plus will give better returns than bank....But it too have its shortcoming like taxes and insurance charges...

But seriously i am looking at silver right now as within 10 years i expect more than 500% return on it

 

[highonlife]

Ya but if someone ask me where to invest such big amount I only says invest in gold and forget....Why to take risk??lolz

It wont make u rich but ya your money wont erode plus will give better returns than bank....But it too have its shortcoming like taxes and insurance charges...

But seriously i am looking at silver right now as within 10 years i expect more than 500% return on it

Yes, but you dont have a silver ETF. And physical silver tarnishes, so it requires maintainence. Unless you want to keep carrying forward silver futures.

 

[magnet]

Yes, but you dont have a silver ETF. And physical silver tarnishes, so it requires maintainence. Unless you want to keep carrying forward silver futures.

Tarnishing makes sense only if u want to use it like jewelery and all

And spot exchange has started silver etf

http://www.nationalspotexchange.com/eseries.htm

Anyways its on extinction path thats why on my radar

 

[highonlife]

Tarnishing makes sense only if u want to use it like jewelery and all

And spot exchange has started silver etf

http://www.nationalspotexchange.com/eseries.htm

Anyways its on extinction path thats why on my radar

Which brokerages let you trade on the spot exchange?
I dont think sharekhan does

 

[magnet]

Which brokerages let you trade on the spot exchange?
I dont think sharekhan does

http://www.nationalspotexchange.com/EmpanelledDPs.pdf


Thats the reason i havent entered yet ..All are too far away from my place to make enquiries and i would love angel or sharekhan to be one of it