Originally posted by basant
There could be months where a smart astute and serious investor would not get new investing ideas in that case it would be prudent to analyse the existing stocks in the portfolio rather then hold cash and wait for new ideas. If a stock that he holds does not qualify as a buy then he has no business holding it in the first place. |
Wonderful post. However, I am not sure I agree 100% with the last line.
There are lots of reasons why people buy and hold stocks. Peter Lynch sometimes bought stocks just to be keyed in on its business. The thought behind it is that you tend to watch the companies that you are invested in more closely than others. Same for Rakesh Jhunjhunwala in India.
The last sentence seems to me contradictory to the overall message of the post.
"If a stock that he holds does not qualify as a buy then he has no business holding it in the first place" -- implies that one should SELL any stock one holds that is currently not on his buy list.
Taking the Wipro example, there were times when Wipro performed extremely well (1999). If an investor would have sold out then, the record would perhaps not been as stellar. (Unless, of course, he had the foresight of putting the money into some other extraordinary stock).