Sjuggerud: Exactly how many shares you should buy

From Dr. Steve Sjuggerud, Editor, True Wealth:

When you buy a stock, how do you decide how many shares you’ll buy?

Most people don’t have a clue how to do this. But it’s something you have to get right – it’s crucial to your investing performance.

So seriously, what’s your process for determining how much of a stock you’ll buy?

Do you say something like this?

Well, the stock is trading for around $5 a share, and I want around $5,000 of it, so I’ll buy 1,000 shares.

Or are you more like this?

I want EXACTLY $5,000 invested in this stock, just like when I buy all my other stocks – so I just divide $5,000 by the current stock price. In this case, I have to buy 987 shares.

If either of these is your “process,” then how did you decide on $5,000 for the position?

What makes $5,000 the “right” amount?

You have a reason, I’m sure… For example, maybe you have $100,000, and with 20 stocks in your portfolio, you divide it up equally.

That’s a fine answer… But why do you divide it up equally?

Is that the best way?

Have you ever sat down and thought about this?

For example, should you have the same $5,000 in gold stocks as you do in a boring bond fund?

If you did this in the second half of 2016, your portfolio would have been crushed.

Investing $5,000 in each position sounds like a plan… But it’s actually just “winging it,” as you would have learned in the second half of last year.

So what is “right”?

This is THE important question… But it’s too big a question to answer here in a short DailyWealth essay.

Instead, tonight at 8 p.m., we will talk in-depth about this question, and more.

We’ll talk about how you can stop “winging it” and start investing like a pro.

By doing this, you’ll maximize your opportunity. You’ll allocate appropriately. You’ll follow a stop-loss discipline. You’ll finally learn to “get there.”

Join us for our webinar tonight at 8 p.m. Eastern time, where we share the details of our new service, Stansberry Portfolio Solutions. You can RSVP today by clicking here.

Good investing,

Steve

Crux note: Smart asset allocation is 100 times more important than any stock pick. That’s why tonight, Steve will unveil our new service: Stansberry Portfolio Solutions. It’s a dramatically better way to improve your investment results in less than an hour a month… without subscribing to another newsletter. This free event is TONIGHT only, at 8 p.m. Eastern time. Save your spot here.

× Subscribe to Crux
Want more posts like these?
Like us on Facebook?
Crux Contributors