Conviction is not the only issue here. The Rabbit-Hole goes much deeper.
We are protective about our money, which is why we invest in nothing less than Page Industries and 3M; the best of the lot, where we have maximum conviction.
But, there is a fine print in that: The conviction is about the quality of the business, but not its stock price.
It is proven research that, beyond 30% correction it is an anomaly that a retail investor can hold. Fear kicks in, and no logic is good enough (which loosely defines fear).
However, Fear is important, one mustn’t do away with it, if at all one could. It is the reason we survive. Stock market operates on the boundaries of fear. Where the majority of market participants will be shaken-out, or dragged in (FOMO). The “powers that may be” have that much liquidity and organizational set-ups that they can play in and out of these boundaries (market swings).
Therefore, I think one should do all he can to set himself apart from the crowd. And arrange his limits further, have wider fear-boundaries.
Otherwise, no matter how well prepared, educated, researched or connected you think you are, you probably are not. The market will soon swing enough, and hit your fear threshold, and you will sell your positions or jump right into the eye of the storm (FOMO).
As one of several remedies, one could work-out a comfortable position-size. He could invest only an amount of which if 50% evaporated, one would not hesitate and instantly break the news to the Family.
If you Invest Rs.100 in Gold, then only Rs.30 in Silver.
If Rs.100 in invested in Large Caps, invest only Rs.20 in small caps.
This is a crucial realization. Otherwise, one remains agitated. He tends to want to follow every piece of news, and know the reason behind every fluctuation.
Investments should be a tool to increase ones prosperity and happiness, and we end up ruining both.
PS: Pardon my chattiness in the early morning. Pls flag the post if it is redundant to the thread.