|Page: Personal Stock Holdings - The Risks of Holding Your Stocks Exposed|
Assuming that you are able to justify the investment(s) you make by impersonal, objective reasoning, every investor still knows that there is a degree of risk involved when an investment has been made in a certain company. This is what I refer to as the risk of your personal stock holdings.
I distinguish two types of risks regarding to your personal stock holdings:
Before exposing the risks of holding your stocks, I would like to point out that I included a personal comment and a recommendation regarding these risks, in the notes at the bottom of this article.
We probably all have seen a stock price plummeting due to the information presented in a company's press release. Although I cannot promise you that this will never happen to you (again) - I can reveal a free and powerful tool which I use to monitor the press releases relevant to my stock portfolio. By clicking on the link provided you will be redirected to the page which explains exactly how you can use this tool for your own benefit. Using this tool helps you react faster to these sudden events, thus increasing the possibility to minimise your loss.
Another type of risk related to your personal stock holdings involves the risk of the stock ownership itself. To demonstrate this type of risk, I have gathered some interesting articles which I recommend you to read. The first article: Holding Your Securities, explains the three possibilities which exist when it comes to holding your stocks:
Depending on which method your securities are held, your risk level varies. Most investors hold their stocks in the account of their broker/dealer (street name). Although this is by far the easiest and most practical way to hold your stocks, you must understand that this method carries by far the highest level of risk, as your stock ownership can only be proven through the records of your broker. Logically, physical stock certificates are the least riskiest way to hold your securities.
If you actually have physical stock certificates in your possession, you run the risk that the stock certificates are lost or stolen. In the article Lost or Stolen Stock Certificates you can read all about what to do in these situations.
If your stock broker goes bankrupt you are protected by the Securities Investor Protection Corporation (SIPC). You can read all about the SIPC by clicking on the link provided. Please keep in mind that the SIPC coverage is limited to $500,000 per customer (including up to $250,000 for cash) and we must assume that the funds of the SIPC are sufficient to cover the loss of all the customers affected by the specific bankruptcy.
Read Your Rights Under SIPC Protection to inform yourself further. I also recommend you to read the following article: If a Brokerage Firm Closes its Doors.
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Note: It's my estimate that it is highly unlikely when one or more of the major stock brokers go bankrupt, that the funds of the SIPC are sufficient to cover the losses of all the customers affected by this specific bankruptcy (or bankruptcies).
Note: Although my own stock broker holds my securities in 'street name', I recommend you to consider holding your stocks - especially those which you intend to hold for the long term - through a physical certificate.
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|My Due Diligence||How I Conduct My Stock's Due Diligence Investigation Process. If you want to know what I learned while I was conducting my due diligence, I recommend you to read all the chapters of the investigation process.|
|My Stock Watchlist||Are These the Best Stocks to Buy Today. In my stock watchlist you find stocks who offer great potential, but at the time I analysed these stocks they didn't comply with all my guidelines from my due diligence chapters.|
|My Stock Portfolio||
Are These the Best Shares to Buy Now. I will add my stock portfolio to this section of the website shortly, but I prioritise adding content in my due diligence chapters first.
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