20 stocks and that's it....forever!!

**taurus6** Sun Oct 22, 2006 6:50 am

20 stocks and that's it....forever!!
I've been turning the clock back a bit looking for ideas and came across this one put forward by Warren buffet some time ago.

Quite a simple idea really.Make each purchase as though you would only get to invest in 20 stocks in your investing lifetime.The idea is that you have an imaginary punchcard and every time you buy a stock your card gets punched.After 20 punches that's it.No more stocks ever.

Of course most of us,Buffet included,will buy many more stocks than this over time but that's not really the point.This is a "Think as if you had to" excercise and is intended to sharpen up the thought process and make you concentrate on what you are doing.

Looking around the bulletin boards both in the U.S. and UK it amazes me how little some folks know about the stocks they are buying.Many buy on a whim,either after a newspaper/tipsheet recommendation or even follow other posters with very little research or thought given.

I'm sure that if you only got to make 20 decisions ever then that alone would concentrate your thoughts as to what you were selecting and you would place a lot more value on the transaction you were making.With this process you would almost certainly make sure you understood all about the company you were buying and you would probably dissect every part of it before you parted with your cash.With only 20 selections to make you wouldn't want to make a wasted decision...let alone take a loss on your capital.

Take a look at your portfolio as it stands at this moment.How many of the stocks in your portfolio now would make your 20?