- Find a great stock;
- Wait for a moment where the stock is not in favor of the market. These great stocks are rarely sold for 15-20 times earnings. If you can find an interesting gap between historical PE and current PE, you probably should buy that stock, except if some very bad thing is going on. I can't detail what could be a very bad thing. Unfortunately, only your judgment will make a difference here. That's the only point of this list where a robot couldn't do the job;
- Buy a small position at first. Something like 1 or 2% of your portfolio. Then, wait for the next earnings to be released;
- Usually, great stocks don't go badly for too long. If the next earnings are worse than the last and the situation seems to get worse, you could sell your small position with a loss. It won't hurt because it was a small position. If the earnings went well, add to your position, even if the stock price goes up something like 5-10%. Your small position at a bargain price will compensate for the rise;
- You now have a 3 to 5% position with a great stock and it was gradual and safe. Or you have a 0% position with a stocks that seemed good but wasn't that good. And you lost only a few hundred bucks. The performance of your portfolio won't be affected this year.
- Don't thank me. I live to give.
mardi 9 janvier 2018
How to build a position
It took me a lot of time to understand the very simple way of building a position with a new stock. I'm ashamed to be almost 40 years old and to write something about that so late in my investing life.