Whether you collect hockey cards, coins, stamps or art it's a lot of fun and if that's why you do it great. However, if you want to make money you should buy the best card, stamp or coin you can afford.
Another important lesson I learned from more seasoned collectors was to start collecting as far back in time for the item as I could afford.
Meaning, instead of buying a mitt full of stamps from 1960-70 buy ONE stamp from 1931 if the cost is the same. That one stamp will be better value than those hundred stamps from the sixties.
It's the same example that Wayne Gretzky and Bruce McNall used when they bought a Honus Wagoner baseball card.
What does this have to do with stock investing?
Own the best first before you add any more. I would also submit to you that when you have new money to put to work, you still buy the best which would mean probably adding to existing stocks you already own.
When starting to build your own portfolio buy the best you can afford. It is an investing myth to believe you can make more money buying 2500 shares of a stock that costs you $2 a share than you can buying 100 shares of a stock costing $50 a share that pays a dividend.
Go for a quality dividend paying stock. When I started out and switched to a dividend growth strategy I only bought 5 stocks at first. I had the money to buy 20 if I wanted to, but after learning lessons from my stamp collecting days the same applied here.
I would buy the 5 best businesses I knew something about and could afford.
Never buy the most stocks you can but instead buy the best and concentrate your money there.
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"Never buy the most stocks you can but instead buy the best and concentrate your money there."
ReplyDeleteTook us a long time to learn this. One does not need 30, 50, or 100 stocks to be diversified. There are certainly more good DG stocks in the US than Canada, but even then one could pick 5 and be fine.
I think after 10 good Cdn stocks, one is duplicating or stretching for yield. We won 12 but 5 are banks.
I couldn't agree with you more cannew. Pick your stocks and initiate benign neglect and you'll be fine. Easier said than done for a lot of us I guess.
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