Day: 18 October 2021

If you want to define every human activity in one word then it has to be allocation. Since early part of life, we have to learn to allocate our time. Once that is something we get a good hang off then we have to focus on allocating the efforts. You can say this is also a question of trade off. When you are allocating something you have competing options with different rewards and costs associated. You have to decide what rewards are worth of your time and efforts. That is essentially life since birth to death.

As a stock market participant your only job is to allocate your capital properly. What does this mean?

You have your capital in some stocks or other assets. Now your job is to not think what has been happening and what has happened earlier with those stocks and other assets. Your job is to think from here what can happen to these stocks and other assets that you hold. If that does not seem great outcome even if best scenario plays out then you have to probably think about other stocks that you do not hold or asset classes.

You have to be concerned with what happens from here. Your reference point can not be something in the past when you saw the stock or when you first bought it or even your average buy price. Only thing that matters is where it is now and where it could be 3 months from now or whatever time period you look at generally.

Allocating your capital to the best of the ideas which can deliver in your time horizon from here is the only job that you have. Nothing else should concern you because nothing else matters.

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