Many people don't have the concept of position limits, so they often go all-in recklessly. They keep buying more as the price falls until they become desperate, trapping large amounts of capital in a wrong stock. They suffer until they break down and finally cut their losses to exit.

In principle, it's best not to allocate more than 20% of your portfolio to a single stock. Even for exceptionally certain opportunities, the limit shouldn't exceed 40%. This way, even if you get crushed, the loss would only be 20%*50%=10% of your total assets, avoiding irreversible damage to your portfolio.

This allocation strategy also has drawbacks: You need to hold at least 5 stocks to fully allocate your account.

It requires a lot of time and effort to research stocks, but you don't want to. You just want to blindly buy with your eyes closed and wake up to profits.

Such absurdity is rare even in children's books, yet as an adult, you...