It is our number one enemy. We tend to be afraid, fearful of losing. One important lesson of any investment skill is fear no more. We, the investors sell away our best stocks based on emotions, making mistakes:
Keep the dying stock.
The longer you keep it, the worst it will get. Its okay to lose sometimes. If you realize it earlier, the better it will get. Some companies do fall. Learn about them. Are they gonna be okay? Analyze their balance sheets. Read what the chairman's notes for the future.
Holding to gain more.
Greed. The more you have, the greedier you become. Be contented. Do not hesitate to sell it. Its better go gain S$100 than to gain nothing. There is always a risk that the price will keep shooting up and up, or worst, going down worst than you expected. Sometimes its is good to protect yourself, your portfolio even if you gain less than what you expected.
Timing the market.
You do not time the market. The market is the mother of all. They can do whatever they want, and you can't stop them. If she is happy, she goes up 10-fold in a day. When she is broken-hearted, she goes down 100-fold in an hour.
It is never your skill to time the market. Sell it when you have to, even though your stock are now S$1.93 and you are waiting for S$2 before you sell. Believe me, S$0.07 is not worth it. In the end, you might sell it at S$1.80. Who knows, right?
Pay attention.
Evaluation. Go through your portfolio every week or month. See what is going on in the company, are they doing well? Are they on track with what they are doing? Reevaluate all the company. Let go the "not-so-good". Is there any M&A? Who is the new competitors?
Well, now you know. Sell if you have to. Do not fear the market. The greatest enemy of all is you youself.
