{"id":31564,"date":"2012-08-13T10:12:12","date_gmt":"2012-08-13T10:12:12","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/08\/the-personal-stock-portfolio-how-to-build-a-stock-portfolio-that-works\/"},"modified":"2012-08-13T10:13:30","modified_gmt":"2012-08-13T10:13:30","slug":"the-personal-stock-portfolio-how-to-build-a-stock-portfolio-that-works","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/08\/13\/the-personal-stock-portfolio-how-to-build-a-stock-portfolio-that-works\/","title":{"rendered":"The Personal Stock Portfolio: How to Build a Stock Portfolio That Works"},"content":{"rendered":"

Article by Investment U<\/a> <\/p>\n

Do you have a tendency to sell stocks when the market is down only to buy them again when it recovers? If so, you\u2019re probably a frustrated investor\u2026 and definitely not alone.<\/p>\n

It\u2019s hard to stay calm when a lifetime of savings is at stake. (After all, this is real money we\u2019re talking about.) But one way to overcome emotional and counterproductive tendencies is to build a personal stock portfolio. Here\u2019s what I mean\u2026<\/p>\n

Many years ago, in an earlier life as a stockbroker, I had a particular client who found it impossible to overcome his worst instincts. Whenever the market had a sudden downdraft, he\u2019d run to cash, abandoning his investment discipline. Then when the clouds cleared and the market rose again, he\u2019d resume the confidence to invest again.<\/p>\n

As you might surmise, this had disastrous consequences as he was forever buying high and selling low. After trying unsuccessfully to calm his fears, I finally hit upon a solution that allowed him to ride through the tough patches in the market with relative equanimity: a personal stock portfolio.<\/p>\n

\u201cWhat kind of car do you drive?\u201d I asked when he inquired about the market again.<\/p>\n

\u201cA Toyota<\/strong> (NYSE: TM),\u201d he said.<\/p>\n

\u201cOk, we\u2019re going to buy a few shares of that,\u201d I said. \u201cWhat kind of computer do you own?\u201d<\/p>\n

\u201cA Mac.\u201d<\/p>\n

All right, we\u2019ll pick up some Apple<\/strong> (Nasdaq: AAPL).<\/p>\n

\u201cWho is your local utility?\u201d<\/p>\n

\u201cDominion Resources<\/strong> (NYSE: D).\u201d<\/p>\n

\u201cCheck. We\u2019ll buy some of that.\u201d<\/p>\n

\u201cWho\u2019s your favorite retailer?\u201d<\/p>\n

\u201cI don\u2019t have one,\u201d he said. \u201cBut I can tell you my wife\u2019s is T.J. Maxx<\/strong> (NYSE: TJX).<\/p>\n

\u201cWe\u2019re going to buy some of that, too.\u201d<\/p>\n

Before long, we put together a blue-chip portfolio made up not just of his automaker, local utility, computer company and clothing retailer, but the businesses that provided him with financial services, telecommunications, prescription drugs and hospital services. All in all, there were 25 stocks in the portfolio.<\/p>\n

It didn\u2019t take long before we got a chance to put this new strategy to the test. When the market started to keel a few months later, he was on the phone.<\/p>\n

\u201cThings aren\u2019t looking so good,\u201d he said in that familiar tone of fear and dread. \u201cI\u2019d feel a lot more comfortable sitting on the sidelines right now.\u201d<\/p>\n

\u201cHold on,\u201d I said. \u201cAre you still sending in that car payment every month?\u201d<\/p>\n

\u201cYeah.\u201d<\/p>\n

\u201cAre you still paying your power bill?\u201d<\/p>\n

\u201cOf course.\u201d<\/p>\n

\u201cIs your wife still shopping at TJ Maxx?\u201d<\/p>\n

\u201cRegrettably, yes.\u201d<\/p>\n

\u201cWell if you\u2019re still patronizing these businesses, chances are the other customers are, too. Why would you sell your shares now <\/em>when they\u2019re so cheap?\u201d<\/p>\n

He thought about this and said he\u2019d have to call me back. But you know what? He didn\u2019t. Not for several weeks.<\/p>\n

When we did finally did talk again he admitted that he had gotten over his jitters by remembering that these were real businesses \u2013 ones he was patronizing \u2013 not just stock quotes or paper certificates. Putting together a personal portfolio turned out to be his salvation.<\/p>\n

How about you? Are you sending a check to Duke Energy<\/strong> (NYSE: DUK) every month, carrying a Visa<\/strong> (NYSE: V) card or shopping on Amazon<\/strong> (Nasdaq: AMZN)? Take a look at how these stocks have performed through the recent financial crisis and weep. They could have been part of your personal portfolio.<\/p>\n

This approach isn\u2019t without its drawbacks, of course. No strategy is. For instance, you may bank with Citigroup<\/strong> (NYSE: C) or use a Blackberry (made by rapidly failing Research In Motion<\/strong> (Nasdaq: RIMM), in which case you would have had a few stumbles \u2013 minimized by using a trailing stop).<\/p>\n

Still, if all else fails, a broadly diversified selection of great companies you actually patronize may give you the wherewithal to respond unemotionally to market volatility rather than cutting and running at the first hint of danger.<\/p>\n

If emotions have plagued your own stock market approach, maybe it\u2019s time to consider a personal portfolio<\/em>.<\/p>\n

Good Investing,<\/p>\n

Alex<\/p>\n

\n<\/a> <\/a> <\/a> <\/a> <\/a>\n<\/div>\n

<\/p>\n

Article by Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"

Article by Investment U Do you have a tendency to sell stocks when the market is down only to buy them again when it recovers? If so, you\u2019re probably a frustrated investor\u2026 and definitely not alone. It\u2019s hard to stay calm when a lifetime of savings is at stake. (After all, this is real money … <\/p>\n

Continue reading “The Personal Stock Portfolio: How to Build a Stock Portfolio That Works”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-31564","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/31564","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/comments?post=31564"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/posts\/31564\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/media?parent=31564"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/categories?post=31564"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex-news\/wp-json\/wp\/v2\/tags?post=31564"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}