Greed lurks in the minds and hearts of stock investors. Who does not want dividends from stocks? You do not have to be a stock exchange guru to know that it is best to buy near a stock price nadir. No one wants avoidable risk. These commonalities are meaningless; top stock investors know that the trick is to back your priorities.
Stock investment thinking wavers. Something that seems right when the stock broker is on the telephone can leave you ruing all weekend. This is why the goals of a stock portfolio should be written down in a descending order of priority.
Assign a weight between 1 and 10 to each objective, with 10 for the most important one. Now write them down in rows of a matrix or in an electronic spreadsheet, and enter stock symbols in columns. Assign a rating between 1 and 10 to each stock against each objective: 10 is again the highest rating. Enter comments in each cell of the matrix or spreadsheet to justify ratings.
Now multiply ratings by weights and tote up the score of each stock. You arrive at a permanent record of your trade-offs of the day. You can review daily exercises over time. Your advisors can participate in setting objectives, priorities, weights, and ratings. Friends can disagree productively, and you can agree with the opinions of people you dislike. Better stock investing for all is a shared benefit.
Could there be objectives and stocks you have forgotten? We will turn next week to generating more creative alternatives for superior stock investing in the next part of this series. Have a profitable week until then.
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