Quote:
Originally Posted by WSSix
I'm just waiting for the first of the year. Then I'll drop my annual Roth payment into the account and buy some more stocks. I'm thinking of either going with 4 or 5 stocks. It'll be a smaller amount in each stock than what I currently have per stock but I want some more diversification. I gotta do something to keep another OXY from killing me. Hopefully byt the end of January I'll have the money transferred and stocks purchased. Unless of course the Mayans are right.
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Thus the magic "5%" rule -- that no single investment be more than 5% of your portfolio... that way it can go to ZERO and would only kick your sorry butt by 5%.
Hard to stick by - and makes you trim "winners" etc - but it's a very good rule 99% of the time.
The bad part of the rule -- there's always "something wrong", right? Is that stocks like the good old days - let's say Microsoft -- or Google -- or an Apple is going GANGBUSTERS and you follow the rule faithfully and sell every time they hit 10% of your portfolio. In hindsight - that can be very painful. As me how I know that!
But it saves you on the downside... so is worth heeding. The old Pigs get fat hogs get slaughtered!