“The “too expensive” label comes from underestimating how a company can disrupt its industry, displace competitors, and grow over a relatively short time. Investors’ fears leave many on the sidelines, only to come in later and drive the stock up further as the writing on the wall becomes more apparent.” Motley Fool Rule Breakers
I think you need to change your investing mindset if you want to replicate Saul’s returns over the past few years.
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Saul is and has always been fully invested in stocks…I have never seen Saul post that he is 10-15% in cash waiting for the market to “correct”. By remaining fully invested, he has captured 100% of the upside, while others wait for the next “correction”. Saul is never afraid to add to his positions even after they have risen (TTD, MDB). Raise your hand if you are fully invested at this time?
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Saul only invests in his highest conviction stocks…This has probably been the greatest influence on my investing methodology…I have been following Motley Fool for 15+ years…My portfolio usually consisted of 20+ stocks…Yes, MF has helped me beat the market averages over that time…however, my concentrating my portfolio, my returns of the past 3 years have “crushed” the market averages…Like Saul, I don’t have time to hold “turn around companies” or those companies that aren’t growing rapidly, with huge gross margins, etc… You need to be ruthless with your cash allocations…If your highest convictions are in your top 10 stocks, why are you holding the bottom 20? How many long time Motley Fool Members are still holding fool favorite PRAA? (you get my point). It is lost opportunity costs…“Hope” and “Investing” should never go together in the same sentence. Hoping for a recovery…most turnaround stocks don’t turn…
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You need to EXCEPT and ACCEPT high volatility both on the upside and downside…If you only want the huge upside potential, with limited downside risks of a 30-40% stock decline, high growth stocks are not for you…that is the price of admission for great returns…
just some morning rambling thoughts…