Based on the following paragraph, answer the questions that follow.

I am upset that my favorite stock, which I owned for a very long time, has decreased in value. If its price continues to fall I am thinking of selling the stock. Should I hold on to the stock hoping that it will quickly rebound? Should I sell it and invest the proceeds in another instrument such as a mutual fund? An index fund may do better than a single stock. What are other differences (such as risks and benefits) between owning a stock or even a small stock portfolio and investing in a broad (market) portfolio via a mutual fund? I think that a single stock or a portfolio is riskier (than the index of stocks) and it involves considerable time and effort (as well as money) to keep track of it. Can I beat the market with my stock portfolio?

Besides, how do I know that I have picked the right (i.e., undervalued) stocks in my homemade portfolio? Am I better at picking winning stocks than other people, even professional managers? Finally, what do I believe about the market if I decide to build a stock portfolio and not simply go with the general market?

a. Can you devise a “good time” to sell a stock, according to your beliefs?

b. What are the pros and cons of owning a stock (or a small number of them) and investing in a stock mutual fund (such as an index fund)? Which approach is preferred and why?

c. What is the purpose of individual stock-picking, based on information contained in this chapter?

d. If you engage in stock-picking activities, what would be the counter-argument for stock investments? What are the advantages and disadvantages of each approach?