Stock Enlightment

Been investing for almost a year now.

Despite setting the goal to increase my dividend income, I don't want to rush into things and risk making mistakes. Good companies are getting more expensive and I really want to evaluate them before "nibbling", a term I caught on from some of my favourite bloggers.

Anyway, I have compiled the essence of what I have learned. Gonna jot them down here:

- Invest for the long term. Don't be afraid of volatility. Volatility works in long term investors favor. The market is a voting machine in the short term, and weighing machine in the long term.

- The easiest way to destroy your portfolio is to think you can time the market with frequent trading. Patience is your greatest asset. The toughest thing about investing is doing nothing.

- Diversify to reduce your risk. Don't pay huge fees to fund mangers. Don't use leverage.

- Cash to a business is like oxygen to a person. You don't think about it when it's present, but you will die when you don't have it. Always have emergency cash to capitalize on opportunities, and act as buffer against bad situations.



I also came across an article on when to sell a stock. Here are some signs:

- A shockingly high P/E (i.e I would classify that as above 50)
- Its economic moat (aka competitive advantage) is in danger.
- A drastic change in leadership, business model, direction.
- A stalling/falling revenue, and profit margin/earnings.
- It recently cuts dividends.