Investing in stocks, with your eyes open
Buying a stock means betting on a single company. Before you start, measure what you are risking, set yourself guardrails and write your rules down with a cool head.
What changes with a single stock
An ETF spreads your money over hundreds of companies. A stock exposes you to just one: its good news, but also its accidents.
Everything rests on one name
A company can lose half its value in a few days, or disappear. Wirecard went bankrupt in 2020 after a fraud; shareholders of Orpea and Casino, two household names in France, lost almost everything between 2022 and 2024.
Much bigger swings
A stock usually moves about twice as much as a major index. A 40% fall doesn’t need a crisis: a disappointing result, a lawsuit or a competitor is enough.
Few stocks drive the returns
A study by Hendrik Bessembinder (2018) of 26,000 US stocks from 1926 to 2016 shows that about 4% of them account for all of the stock market’s net wealth creation, and that more than half did worse than plain Treasury bills.
Our own biases
Overconfidence after a gain, fear of missing a rally, refusing to sell at a loss, a preference for what we know: these reflexes often cost more than the choice of stock itself.
If you go ahead: the guardrails
Investing in individual stocks is not forbidden. But those who last do it with limits set before buying, never in the excitement of a rise or the fear of a fall.
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01
Keep a passive core
Common benchmark: most invested savings stay in diversified ETFs; individual stocks are only a small share, often 10 to 20%.
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02
Cap each holding
No stock weighs enough to put you in trouble if it loses 80%. Many set themselves 2 to 5% of the portfolio per holding.
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03
Write your rules before buying
Why I buy, when I add to a position, when I sell. A rule written with a cool head holds better than a decision taken in the heat of the moment.
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04
Plan for the fall
Decide in advance what you will do if the market loses 30%: it is the best way not to sell at the bottom.
Your investor charter
A few lines, written once and reread when markets get choppy: your horizon, your limits and your own rules. Le Petit Investisseur neither judges them nor suggests any.
- Horizon
- 15 years
- Monthly budget
- €300
- Max. share in individual stocks
- 10 %
- Max. share per holding
- 3 %
My goal
Build a deposit for a home purchase in 15 years, without touching my emergency savings.
I buy when…
I put €300 a month into a world ETF, whatever happens. I only buy a stock if I can explain in three sentences what the company does and why I would keep it for five years.
I sell when…
I sell a stock if the reason I bought it is no longer true, never because it has fallen or because an article mentions it.
I never…
I don’t borrow to invest. I don’t follow tips from social media. I don’t check my portfolio more than once a week.
If the market loses 30%…
If the market loses 30%, I sell nothing, I keep up my contributions and I reread this charter.
The path’s last step
Once your charter is written, you’ll have the basics to invest with peace of mind.