The following is a brief, simplified guide to the basic principles of stock position.
1.
Find out if you’re trading in the right direction: the market is not always right for you.
Many stock picks fall prey to this phenomenon.
This happens when a stock is trading at a significant discount to its intrinsic value, or the price at which it could go up in the future.
An example would be a company that was trading at the top of its price range but which subsequently fell off sharply.
2.
Determine whether your stock position is solid or risky: do you really have enough cash to make it through another year of this stock price-gouging?
Or are you looking to get in on a buy-and-hold or sell-off strategy?
If the answer to either of these questions is no, you may need to rethink your strategy.
3.
Look at your current position: are you trading for a potential buyer or seller?
Do you have enough money to buy and hold a position until you sell it?
4.
Take stock risk: is it really worth it to trade a stock you don’t know you need to sell or buy?
This is where the risk comes into play.
A small amount of money can buy you a lot of stock if you trade a position that is not strong enough to warrant the capital.
It also can buy a lot more stock if your position falls.
5.
Invest in a company: do your research, look at the company’s prospectuses and watch for any signs of a bubble.
It’s not always a good idea to invest in a stock that’s already trading at prices that are well below its intrinsic valuation, but if you have a solid position in the stock, you should be able to get a good price for the stock at that time.
6.
Evaluate your current trading strategy: do the math, make your own decisions, and do what works for you: it may seem like a lot, but in the end, it may not be as expensive as you thought.
7.
Deter the risk: do we really need to invest $20,000 to $100,000 in a hedge fund?
This might sound like a great investment for the long term, but you need a solid investment plan for when the market crashes.
This could be your best investment.
8.
Evalue your past trading: does this stock trade well?
Does it seem like the company is going to survive the next crash?
Are there any signs that it’s a potential buy-out target?
If you’re worried about losing money in the next downturn, consider getting rid of your position or holding off on making any significant purchases.
9.
Make a trade: you have to be careful not to sell too soon, because the price may drop too quickly.
This may sound risky, but it’s not.
The more you look at your portfolio, the more you may have a good understanding of what the price should be.
You should be careful in deciding when to buy, but once you’ve made a decision to buy or sell, you needn’t worry too much about the price.
10.
Invest: a portfolio of stocks is a good place to start investing.
You’ll need to put a portion of your money in stocks that you’re not going to want to sell, and this is something you can do easily with a portfolio manager.
You may also want to look into buying a small number of small companies.
The longer you invest, the better your chances of earning the profits you’ll get from those investments.
11.
Don’t panic: the next time you’re sitting in the market, just keep in mind that there are a lot less people doing it than you think.
Stock pickers have a tendency to think that they’re the only people in the world trading in stocks.
The reality is that there’s probably more people trading stock than there are people in this room, and if you do the right thing and take the time to think about what you need in your portfolio and the risks associated with it, you could end up with a solid long-term position.
