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This blog is a follow up to an earlier blog titled:
Increased investment in Religare Health Trust by more than 150%.
This is in response to a request by Reader A.
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| READER A. |
In fact, we should welcome it as investors.
If we do not have the stomach for volatility, stocks could be a bad place for our money.
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| READER B. |
In a situation like that, apart from having an idea of what is a decent price to pay, how do we prepare ourselves mentally to pull the trigger?
Ask:
To what extent can we afford to be totally wrong?
After all, if we are totally wrong, we could lose all the money we invested.
Can we stomach that?
It is all about having peace of mind as investors.
If you have forgotten or have never read my blog on that before.
Read it: HERE.
Remember:
1. Don't use borrowed funds.
2. Don't use funds earmarked for other purposes.
Use only money we can afford to lose and meant for investing for income.
Even though it is money we can afford to lose, ask:
How much of it can we lose without losing our minds if things should go wrong?
Of course, we want to avoid being wrong.
We try our best to get our facts and reasoning correct.
However, despite our best effort, we could still be wrong.
We want to be greedy when others are fearful but we don't want to be so greedy that we throw prudence out the window.
The resulting monetary loss from being wrong must be something we can stomach easily.
Otherwise, don't be in doubt.
We really should stay out.
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