Don't fall in love !

From the investors.com.

Don't Fall In Love With A Stock
BY CHRISTINA WISE

Falling in love can be wonderful. There's an extra bounce in your step, the sky seems a little more blue, the air a little more sweet.

But if the object of your affection is a stock, you're in for heartbreak sooner or later.

It's easy to grow attached to a stock, particularly one that's made you a lot of money. After all, you brilliantly spotted and invested in it. And the company, like a favorite child, can do no wrong.

Missed earnings for one quarter or two? You might dismiss the news by saying they've just hit a small bump in the road. A sharp downturn in price on an avalanche of trade? The short sellers are conspiring against you and your investment sweetheart.

Ignore the warning signs long enough and you could watch your profits, even your initial investment, evaporate.

So no matter how you feel about a company's products or its stock, keep studying the stock's price-and-volume action. Refresh your memory about good sell rules that help you cut losses and lock in gains. Finally, develop as best you can the discipline to execute these important rules. After all, you're in the market to make money.

People made a lot of money riding Commerce One, Qualcomm and other wonder stocks north in 1999 and early 2000. They led the tech revolution and were seen by many as having almost unlimited growth potential. But as past booms show, all good things eventually come to an end.


The 12 stocks in the chart above were the top performers of 1999, rocketing an astounding 1,744% during the year on average. Most gave back all their gains and more.

If you were caught up in this market-induced love trap, you're not the first. Getting overly attached to stocks is a rut that novices and experts alike have fallen into time and again.

Even Nicolas Darvas, the nightclub dancer turned market master, found himself getting overly attached to his winners in his early trading days in the 1950s.

"I thought of them as something belonging to me, like members of my family," Darvas wrote in his book "How I Made $2,000,000 In The Stock Market." "I praised their virtues day and night.

"It did not bother me that no one else could see any special virtue in my pet stocks to distinguish them from other stocks. This state of mind lasted until I realized that my pet stocks were causing me my heaviest losses."


What does this tell you ? Sell Reliance if you have made big profits in it. Same goes with HLL, it might have recovered from its 52 week lows, but short term future doesnt look too bright

Timing the market !

When did you last sell something and it went up the next day ? It happens to almost everyone including you and me. Timing the market is a strategy where you try to predict the market to increase your profit by constantly booking profits and buying new stocks. So you want to buy at every rise and try to skip the fall. Okay, now, do you know anyone who has timed the market and been on the right side more than 75% of the time ? If so, do let me know. The best way for small investors is to invest for long term and avoid timing the market.