Build Your Stock Portfolio For Long Term
By Greg Davisson
Stock market is a very tricky thing and investors can lose money very easily in the stock market. You need to be very very careful when you invest in the stock market. The volatility of the stock market can destroy your entire wealth in a matter of minutes. That is why it is important to have a diversified portfolio.
That said the important thing that is out there for market beginners is to understand that it is always better to build a stock portfolio that can absorb the short term swings in the fortunes of the companies and can ride on any upswing very easily.
The first golden rule in the market is the fact that you should always have about 20% of the entire investment money as cash. It is a must for two reasons. The first reason is that in the event of a stock market crash you will have the money to survive and secondly you will have money whenever some special opportunity arises for some good short term money making.
The second golden rule for building a portfolio for long term is the fact that it will help you survive the stock market downward trends and that will mean that you should always have some amount of money in defensive sector stocks.
The third rule for building a good portfolio is to make sure that you keep on adding stocks to your portfolio which are not fully priced but have potential for future. That will also mean that every downwards movement of a good stock you should buy more so that you can get the benefit of dollar cost averaging.
The main thing is that you will have to do fundamental research and very good analysis for the stock that you are buying. These stocks should be in your portfolio for about ten years. If you want to have short term profits then go for day trading or momentum stock trading however never even think about combining both long term and short term strategy.
Also always limit the number of stocks to about 15 to 20 which you can easily manage else you will be spreading yourself too thin and that will not allow you to concentrate and devote time to research. Patience and perseverance is a virtue that you should have as otherwise you cane easily get frustrated. You will eventually make money however that money will take some time to come.
For stock market beginners the basic definition of NASDAQ [http://stockmarketforbeginnersguide.com/what-is-the-definition-of-nasdaq] is a must and it is to have a good diversified stock portfolio [http://stockmarketforbeginnersguide.com/what-will-happen-to-my-stock-portfolio/]