As the year 2014 quickly fades into the past and the year 2015 is thrust upon us on a cold Thursday morning, I'm planning on focusing on only a few industries and sectors this year. As a result of this decision I'll be concentrating rather than diversifying my investments. And that strategy begins tomorrow, 2 January, the first trading day of the new year. I know all the experts say that diversification spreads out risk, but too much diversification can lead to a wide but shallow portfolio. This year (the year of the sheep), I'm planning on putting more money into fewer stocks and building up bigger positions.
"Wide diversification is only when investors do not understand what they are doing." |
I can still find a lot of great companies to research and invest in, but I think this year I'm going to diversify a little less and concentrate a little more. I'll still research, find, and write about all those great companies that I find that pay great dividends and have great estimated one year capital gains, but I'm going to be a little more selective in the ones that I actually end up investing in.
That doesn't mean that these companies aren't worthy of investing in, it's just that I don't want to get involved in the 70 or 80 companies that I've noticed many of the other dividend growth investors seem to get involved with. I'm going to attempt to find the "best of breed" in each category and then concentrate on accumulating larger positions in those companies.
The biggest benefit I see is that I will be able to trade a larger number of option contracts on each of my positions while simultaneously reducing my overall trading costs. It can also lead to more trading with slimmer margins and higher probabilities for success. In the end this will mean I can generate a higher monthly income from those derivatives.
I hope this doesn't reduce the number and quality of articles I ultimately write each month but only time will tell. I'm still always on the lookout for new ideas to increase wealth and monthly income. As this new year begins, I wish everyone the best in all of their trading.
The year 2015 is gonna be a great year!
The biggest benefit I see is that I will be able to trade a larger number of option contracts on each of my positions while simultaneously reducing my overall trading costs. It can also lead to more trading with slimmer margins and higher probabilities for success. In the end this will mean I can generate a higher monthly income from those derivatives.
I hope this doesn't reduce the number and quality of articles I ultimately write each month but only time will tell. I'm still always on the lookout for new ideas to increase wealth and monthly income. As this new year begins, I wish everyone the best in all of their trading.
The year 2015 is gonna be a great year!
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