Owning Stocks is like Having Children

One very interesting statement that I read in Peter Lynch's book: Owning stocks is like having children. Meaning we should only buy as many stocks as we can handle, especially for those part time stock holders. Because, it takes time, patience and effort to manage each one of the stocks. Even if it means that we only look at the annual / quarterly report every 3 months. But still, that takes time.

Personally, apart from the annual and quarterly reports, I usually will search for any potential risk that the company might face on a regular basis, especially when it comes to a company that has debts, it's important to know that they are still able to pay off the debts and not end up in bankruptcy. For such cases, usually you will see a notice in the SGX announcements or even just the regular news. When the red light indication is on, you just need to be aware and careful about that particular stock you are holding. Because, it might be just between 2 weeks to a few months that the stock can get suspended from trading and there goes all the hard-earned money...

I have to admit that there was once several years back (2009) before I understood all these that I almost held on to a company (Celestial Nutrifood) when it got suspended. I'm pretty glad and relieved that I was one of the few that sold it about 1-2 weeks prior to it's suspension. From the time I bought that stock to the time it gets suspended until today is about almost a month. I managed to sell it off at a better breakeven price and was glad that I didn't buy it again when the price dropped further. I still remember that I saw a piece of news that advise its investors to be caution around that time because of some potential default or something and that news was on the internet as well as in the papers (a chinese newspaper if I remembered correctly). I was pretty worried until I sold off the stock. I'm very lucky for that I would say.

The lesson I learnt then was to be more selective over what I'm buying and not to ever risk my money buying something that had similar bad news ever again. Imagine, if I had like much more shares than I could read up the news on, would I get to sell in time before that share got suspended? I definitely won't be able to find out about that.

Peter Lynch says that the part time stockpicker probably has time to follow 8 - 12 companies but I would say that it depends on the amount of free time that YOU are able to delicate towards at least following the news and reports on a weekly to at least fortnightly basis (the less loans that company have, the less effort you need to monitor it). I seriously can't see why a stock without loan will actually close down due to funding issue.

Just my 2 cents comments.. It's really all about you and not exactly just the stocks when it comes to your own stock investments.