A successful invester, as opposed to a trader, does two things well: he identifies a good company from the thousands of companies available, and he chooses the right time to buy and sell. Sounds easy enough doesn’t it? But the ultimate result of this process is very few trades and a lot of patience. Or buy slow and sell slow.
There is also something else that slows you down as a focused investor: You limit yourself on how many different company’s stocks you hold. This may mean a buy will replace a company’s stock you already own, so you have to make a choice on which to sell.
In my process, I check each stock I own once a month to determine if it’s time to sell. Normally the answer is no because of how choosey I am in the first place. If I add a stock, do I have too many to manage? Am I going to lose total return? If I’ve got 10 great stocks, why would I make return less by adding an 11th?
If I have money to invest, the typical place to put it is into one of my winners. Not a new stock. The time to add a new stock would be when one of my current stocks is underperforming and the stock’s story has changed. Did they have a losing year? Have they run up debt? Did they just have a major scandal that affected the company’s bottom line? Something that changes the company as a good investment is what I would be looking for.
So if you shackle yourself similarly and pick great stocks, you will have a hard time selling what you have, and a hard time buying something new. Boring. But the good kind of boring.