Part 5: Process or How the heck do I Invest in Equity Successfully?
5.12 Manage your portfolio like a fish tank - Part 2
When do you sell a stock in your portfolio? How much, how quickly? How and when do you rebalance your portfolio?
This is perhaps the most important lesson you can learn from owning and managing a fish tank which is radically different than have a pet dog or cat.
Lesson # 7: Owning a Fish-tank is different than having a pet dog or a cat. The best lesson that the fish tank teaches you is that you can like your fish but you can be emotionally detached unlike having a dog or a cat as your pet. Losing your pet dog or a cat is emotionally traumatic because you get attached to them big time, especially dogs because they love you unconditionally, play with you, go for walks etc. It’s very difficult to replace them and adding one more is a huge commitment.
Not so with fishes, you go and get a few more in case you lose some or there is space for more. The other important lesson is that if you see any fish is unwell, behaving differently, not eating etc, you isolate them quickly. You cannot let it continue to be in the fish tank as it could create problems for other fishes. And in case it dies you have to remove it immediately; you can’t leave it around to rot.
The same is with stocks in your portfolio. That brings us to the question when to sell a...........Read More
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