Falling in love with an asset
The risk of falling in love with an asset is, what can you have any stock either paper, which you fall in love with.
You are a novice financier and not so long ago you came to the securities market. You have acquired a seperate story, your favorite, which brought you an extremely good profit.
Profit can be an increase in the exchange rate. For instance, you purchased paper by $20, and she is currently standing $100. And you rejoice, what she brought for you 500% income. Or you have purchased a share on 20 rubles, and she is currently standing 30-40 rubles, but your dividend efficiency is extremely high, since the company began to pay generous income from securities. You are in 2-3 years you have been receiving excellent income from securities.
When the company's monetary characteristics change, it is extremely important to see it. Does not mean, what a great company, which brought the highest result for you, will continue to remain so.
Falling in love with a company leads to, that people begin to violate the principles of expanding the range, increasing the company's share, as it grows and often brings good profits.
Trees don't grow up to heaven. The same can be reported about promotions.. It is necessary to constantly monitor the monetary characteristics of companies, to reduce the share of one or another company, when she becomes:
- very high
- ceases to be this good, what she was until recently
Need to find another story.
Warren Buffett's advice
Warren Buffett says:
Behave with stocks, how do you behave with your husband.
You will be able to follow the company for an extremely long time and a lot, ask the price of her. Implied, that when you purchased the share, she will be with you all your life. However, if the stock does not generate income for you, which you were counting on, nothing prevents you from getting rid of illiquid paper.
Therefore, constantly look at your relationship with the company.. Inspect meticulously its foundational characteristics. What are the subsequent long-term opportunities to work with her? Don't fall in love with the company. This is extremely important, especially at the moment, when extremely high efficiency has been achieved in a small space of time.
There are a lot of such stories in American, and in the Russian markets. Be extremely careful.
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