Why not 100 percent in Stocks ?
“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” Benjamin Graham
The British born American Investor and the Father of value investing, “Benjamin Graham” said the above quote that how the Market reacts as a machine, so which one you need.
He also advises you never to had more than 75 % on your total assets in Shares. It is not advisable for everyone to making a whole in the same financial asset. You should diversify it to reduce the risk.
You are one of them, if you –
- Have set aside enough cash to support your family for at least one year.
- Will be investing steadily for at least 20 years to come.
- Survived the bear market when it starts
- Did not sell shares during the Bear market.
- Bought more shares during the Bear time.
The Investor should aware about the Market Fluctuations and also the possibilities. Then he should be prepared for them both financially and psychologically.
On Investment decisions, there are two possible ways by which he may try to do this,
- The way of Timing
- The way of Pricing
By Timing, we mean the endeavor to anticipate the action of the stock market, to buy or hold when the future course is deemed to be upward, to sell or refrain from buying when the course is downward.
By Pricing, we mean the endeavor to buy stocks when they are quoted below their fair value and to sell them when they rise above such value.
He also advises that a serious investor is not likely to believe that the day to day moments even month to month fluctuations of the share market make him richer or poorer.
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(Text Courtesy: Derived from the book, ‘ The Intelligent Investor’ by Benjamin Graham )
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