[Guide] Never Ever Invest More Than 15% of Your Savings in a Stock!

Be it the Japanese value-stock Sankyo Frontier or the crypto-coin Terra, everything can, and often will, go wrong!

What I am trying to say with this alarming title is that even if you have done all the research in the world, posses watertight insider information, or even have an incredibly strong gut feeling,

never think that nothing can go wrong with your investment!

I recently learned this from one of my [previously] favorite Japanese stocks: Sankyo Frontier.

The company has had an incredible track-record of increasing profits, revenues and dividend for over seven years straight, with a Price to Earnings (P/E) ratio of less than 10!!

In fact, I loved the stock so much I made a YouTube video about why you should buy it that you can see here:

Disaster Strikes… Sankyo Frontier Lied to us!

”Sankyo Frontier announced on the 17th of May that inappropriate accounting “errors” were found at multiple sales offices. Over numerous years, there were clothes, material and cost changes by sales staff. The amount are yet to be disclosed ” - Nikkei, 18th of May, 2022

On March 20, 2022, the Sankyo Frontier stock was down by about 22%.

“Luckily” for me, I invested less than 5% of my total portfolio assets in the stock.

How come I invested so little money in Sankyo Frontier even though I wholeheartedly believed that the company was severely undervalued?

Companies Lie all the Time…

Because I have seen similar events time and time again! Companies lie all the time, often unintentionally.

For example, the CEO of All Nippon Airways (ANA), Shinichi Inoue, said in the beginning of 2020 that he was a 100% certain it was going to be the best year for the company in history.

He clearly couldn’t foresee the incoming pandemic, but that matters little to the people who went all in on that statement only to lose almost everything…

Why Investing <15% of Your Assets is the Golden Rule?

The reasoning for this golden rule can be summarized with what is commonly known as Murphy’s law: “If anything can go wrong, it will”…

This is why you should never invest more than 15% of your savings in any stock.

Why not more than 15%? Well, that’s just an arbitrary number that is small enough to not cost you your life savings and that is easy to remember.

To truly hammer in this point I will repeat the golden rule one last time:

Even if you are a 100% sure about something, never ever ever bet more than 15% of your money on it!