Tuesday, August 3, 2021

My No-Longer Unwritten Rules

Since I haven’t been posting much over the last couple years, but I’ve kept consistently adding to my portfolio, I thought it was time to formalize the unwritten rules I’ve been following.

-          Make at least one purchase every month: The rationale is that if I get in the habit of regularly adding to my portfolio, I’ll be less likely to hoard money in an attempt to time the market.

-          Only add to positions that have grown their dividend in the past 12-months: Although there are companies in my portfolio who have not grown their distributions in the past year, I simply won’t add to them as I’d rather focus on exceptional companies that are able to grow their distributions regularly over time.

-          Do not add to any position if the result is the holding accounting for more than 5% of my total portfolio value: Although I’m not against holding concentrated positions, I’d prefer that they develop organically via share price growth, as opposed to through my overconfidence.

-          Sell losers, not winners: The analogy of harvesting flowers and watering weeds is pertinent for me, especially in my unregistered account, where tax loss harvesting is an excellent strategy to minimize my long-term taxable capital gains. Plus, I’m almost always wrong when I think “This stock can’t possibly go any higher…it’s already so overvalued!”

-          Never compare myself to anyone else: I used to track my progress against some of you who are reading this, but the reality is that we likely have very different goals, personal circumstances, and investing philosophies. Although I'm always happy to see a peer who is making progress in their journey, I find my joy focusing on my own process of investing. 

That's all for now. I hope to keep updating this post as I find more rules that I'm following.

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