My Personal Rules:
The idea in setting rules of behavioral engagement in your stockmarket investing strategy is to build a framework of portfolio maintenance and upkeep that keeps you diversified, flexible, and more involved in the process.
1- Reaffirm your conviction, or confront your denial.
Each investment - declining or rising in value - requires your attention and review with the passage of time or with material movement in price. You have to revisit your original investment thesis and remain convinced that it is intact. If not, then never be shy to say "goodbye for now".
2- Let the market do the talking. Stock price charts and stop losses can help keep you out of trouble. Someone knows more about your investment than you do and that may be reflected in the charts.
3- Forget an emotional attachment to your investments. Your stocks don't send you Christmas cards. They don't even know you own them. Even if you have a consumer love affair with the underlying company, the stock may be a different animal. You can part ways with stock any time.....and still buy the company's products.
4- The Macro headlines will torment you, the micro opportunities are all around you.. You will be tormented by gurus, market forecasters, investment bank company strategists, Chief Investment Officers of money managers, and an overpopulated collection of overly bright people that should be doing more important things in life than passing the time on TV telling you what in the world you have to be freaked out about. They serve very little purpose with the exception of making you excessively paranoid about your personal investing strategy and capabilities. Take care of the micro - your own investment strategy and analysis, and ignore the macro.
5- CCM: Convenience+Complacency = Mediocrity
Packaged, well marketed investment vehicles can make you take your hands off the wheel. That leaves you exposed to subpar returns over time. Since the advent of the mutual fund, the arms-race of financial innovation has accelerated over the last 35 years, leaving the investor almost de-sensitized in many cases to the true concept of ownership - direct ownership of a stock issuer or bond issuer. Investment product packaging brought convenience and ultimately complacency. That cannot be healthy over time. Mediocre results beckon.
6- Your edge often lies in the small, the undiscovered, and the unknown. Being dedicated to just the over-owned stocks with familiar names gives you no real edge. Investors should look at the suitable smaller and less followed stocks. In the market, small guys can beat bigger guys to the punch every time. And small retail investors can buy stocks in smaller well managed companies that institutional investors cannot....especially when size and liquidity are too sparse.
7- You can buyback a stock at a price higher than you originally sold it. Things change all the time, and the same goes with a company's stock. A stock trades every business day. You can get back in.....yes, higher than what you previously sold it. I won't tell anybody!
8- Keep the fridge fresh. Stay engaged.
Old tired smelly positions can rot in your "portfolio refrigerator". Get out that old spaghetti sauce! It's taking up valuable space! It's a variation on theme #1
MY PERSONAL HANDICAPS:
1- An Omnivore at the Stockmarket Buffet Table
I have stock market ADD. I see too many company presentations. It can be distracting, but the learning process that comes along with connecting with so many knowledgeable passionate entreprenueurs, gives us that all important edge that i keep talking about.
2-- Mental Blocks and Biases against certain Industries
I have a bit of an allergic reaction to resource stocks. (But my stockmarket ADD can neutralize that!)