At one time or another you were probably reminded to watch your Ps and Qs. For most of us this means to pay attention to the details, especially the little things. Although there are many theories as to how the phrase came about, the one I like most is from the age of the industrial revolution and the printing press. The printing press required the placement, in reverse, of individual letters onto a typeset for a page to be printed. You can imagine how easy it would be to reverse the lower case p’s and q’s. This job was normally handled by a young man, ten to twelve years old. I can envision the Master printer instructing the young man to “Watch your Ps and Qs!’ as he set the type.
Remembering those little p’s and q’s can also play an important role in the management of your investment portfolio. Just as the Master printer reminded the young man to be careful in his typesetting I would like to share with you 3 Ps and 2 Qs to watch out for as you set your portfolio for the future.
The 3 Ps:
Picture – When it comes to your portfolio, getting the “Big Picture” right is the single most important job you have. Where do you invest your money and why? Should you own stocks, bonds, commodities, alternatives or maybe real-estate? How much cash should you keep in reserve, if any?
Price – The result of every investment you make is fully dependent on the price you pay for your investment. How do you determine if the price you pay is too high?
Patience – Investing in the capital markets is stressful. Do you have enough confidence in your research to endure the emotional tug of war that the markets will put you through in the future to reward you for your efforts.
The 2 Qs:
Quantity – Do you put all your eggs in one basket, and watch the basket, or do you put just a little in multiple baskets to minimize the risk of breaking an egg or two?
Quality – Should you own investments with a higher probability of being around for the next year or two? Or do you make a speculative investment knowing full well that you could lose everything with an outside possibility of getting rich?
In the next few weeks we will be exploring these Ps and Qs and how our firm pays attention to each.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.