Buy “the basket”: Can’t decide which of the companies in a particular industry will be the long-term winner? Buy ’em all! Buying a basket of stocks takes the pressure off picking “the one.” Having a stake in all the players that pass muster in your analysis means you won’t miss out if one takes off, and you can use gains from that winner to offset any losses. This strategy will also help you identify which company is “the one” so you can double down on your position if desired.
A stock split is when a company increases its total shares by dividing up the ones it currently has. It is typically done on a 2:1 ratio. For example, if you own 100 shares of a stock priced at $80 per share, after the split, you'll have 200 shares priced at $40 each. The number of shares changes, but the value remains the same. Stock splits occur when prices are increasing in a way that deters and disadvantages smaller investors. They can also keep the trading volume up by creating a larger buying pool to trade. If you invest in a stock, expect to experience a stock split at some point.
What would make me sell: Sometimes there are good reasons to split up. For this part of your journal, compose an investing prenup that spells out what would drive you to sell the stock. We’re not talking about stock price movement, especially not short term, but fundamental changes to the business that affect its ability to grow over the long term. Some examples: The company loses a major customer, the CEO’s successor starts taking the business in a different direction, a major viable competitor emerges, or your investing thesis doesn’t pan out after a reasonable period of time.