MY FORBIDDEN LOVER
Valentine's Day reminded me of something...
No ..it wasn't to avoid going out that night to be mugged by a restaurant adding the word "love" to everything it does normally and bumping up its prices by 50%. I already avoided that.
Me and the Mrs did the early bird at our fave restaurant two days afterwards instead. Who said romance was dead?
Anyway, it reminded me of something important: Never fall in love with a share.
I see traders doing this all the time. They fall in love with one or two companies, believe in these companies and can hardly believe it if the shares in the company go down. They usually buy more as it goes down.
I met one chap who fell in love with a share called Dragon Oil. He loved it so much he went in way over his head buying all the way down from 500 to 120p!
I have done it myself, though it was many years ago to be fair.
My love affair was with Coffee Republic. I only bought it as there was a branch close to me and I liked the coffee.
That's a real dumb reason to buy a share. Because you "like" the company. I bought in the late 20s, late teens, more at 8p and eventually dumped at 3p after losing more than seven grand.
That share drove me crazy: I even kept going in buying more coffee in the hope it would push up the share price!
When I cut it, it really did feel like the end of a love affair. I felt sad, but it wasn't long before I felt a lot better about it…when it went bust!
Signs you have fallen for a share? You can't wait to see its opening price... you watch it all day, you keep buying. It's in your thoughts all the time. You dream about the millions it is going to bring you.
You'd ditch your friends and your wife in return for it going up.
All bad signs of probably bad trading.
Just don't get obsessed with a share especially if you started off losing with it.
One thing I usually do if I lose a couple of times with something is take it off my watch list otherwise those feelings of revenge on your lover come into play!
And remember your portfolio should contain a decent number of different shares and should not be skewed towards just one or two shares you have big stakes in because you fell in love.
One other thing, while you're still with me, you Twitter generation...
Trading is a business and emotions have nothing to do with it - put them aside.
The shares I put forward to watch in 2012 I'm nearly in love with (stop!!!) as many have done rather well so far, see my last column for the full list.
Star awards go to Vislink, Filtronic, Monitise, Carclo, Iomart, Computacenter and Yule Catto for some big gains already. Not much from Bayfield or Innovation, but hey - it is only February!
I would say in reality I love none of the above and would quite happily dump them at a moment's notice.
I'm afraid as a trader - you have to chuck love out of the window. Hard-hearted and mean, that's me.