A concentrated portfolio is hard

I’ve been a Foolish guy for a bit, pushing 20 years in SA as my first subscription. I’ve added and dropped other subscriptions along the way, Foolish and many others.

I lost a lot of money (for me at the time) following Lenny Dykstra, Nails on the Numbers, with options. I love baseball. I learned a lot about options.

It’s funny, right? You pay a lot more attention when you’re losing money. Or maybe that was a lesson I had to learn, and I need to pay attention ALL the time, up or down. That’s a concentrated portfolio.

My LTBH strategy is challenged. After lurking here for a year or so I’ve made some changes to my portfolio. I’m down from ~58 positions to 38. I love each one of the 38. Now to differentiate from a level of love from ‘everything is a 10’ to ‘friends at 9.8 gotta go.’

I shared a Drunkenmiller quote earlier, he of the ‘all in on your conviction.’

https://en.wikipedia.org/wiki/Stanley_Druckenmiller

My fear, my hesitation… This is the largest, most important portfolio I’ve ever managed. It’s on me, and mistakes push me and my family to the local trailer park.

-Kip

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I’ve a long time investor and never did any options trading although I’ve read money can be made doing but one thing I remember reading is “you can lose your shirt” trading options if you’re not careful and paying attention. That definitely scared me off of trying that strategy…that’s for smarter people than me. :wink:

Perhaps soon, you’ll work up to a bigger trailer Kip…you’re saving money now…and there’s no grass to cut. :slight_smile:

Lucky Dog

My LTBH strategy is challenged. After lurking here for a year or so I’ve made some changes to my portfolio. I’m down from ~58 positions to 38. I love each one of the 38. Now to differentiate from a level of love from ‘everything is a 10’ to ‘friends at 9.8 gotta go.’

Definitely agree, specifically in regards to following the general TMF LTBH advice. I’m continually trying to rectify TMF’s ‘let time do it’s thing’ with Saul’s more concentrated, more inclined to sell strategy. I’ve done that to a great degree already. But I’ve got a few stalwarts across the port that I haven’t yet pulled the sell trigger on yet. They haven’t completely killed and I’m giving them time to do their thing because I believe in the company…or because I’m priced anchored…not sure which. :slight_smile:

What I’ve gleaned from Saul by following along here and contributing when I can (which is hard, since there are plenty of more insightful folks here that already do) is that the bolded part above is a key part of Saul’s success. It’s easy to recognize, but harder to put into practice.

For instance, my first LGIH buy was in Feb 2016 with an initial cost basis of 19.45. It has absolutely killed for me, more than tripled since then. I trimmed it by more than half pre-earnings to a normal-sized (for me) position of 5% but I can’t imagine selling out completely right now, even though everything Saul and others have posted about it here makes sense. Tough comps upcoming, cyclical industry, not likely to triple again (is that actually a real reason to sell?). Kinda in love with this stock. There are a couple others that have done significantly less well. I’m working on falling out of love with them though, and not falling in love with the ones that ARE killing.

All that said, I’m up 24% YTD. But, I struggle between “being up 24% in three months is amazing” and “how much better COULD I be doing?”.

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All that said, I’m up 24% YTD. But, I struggle between “being up 24% in three months is amazing” and “how much better COULD I be doing?”.

Less than 3 months as it is only March 10th. Even if it was a full 3 months, that would essentially be 100% annualized. Thinking you should aim to do better than that might be pure folly. Just an hour or so ago, I was messing around with my spreadsheet and noted that I’ve been up a bit more than 60% annualized for the period starting as of 3/1/2016. I extrapolated such a growth rate out into the future just to see what that would look like…and it would make me a trillionaire by 70 (assuming away taxes, withdrawals for living expenses, philanthropy, etc.)…absolutely insane to think anything close to that would be sustainable as a long-term average. Looking back at the knowledge base and recalling the '17 EOY review, looks like Saul has had right at 4 years that were either approaching or in excess of 100% gains, with '99, '03, '09, and '17.

1999: 115.5%
2003: 124.5%
2009: 110.7%

All that said, thinking 24% in 2.33 months is anything other than pretty amazing and something to be grateful for is probably an unhealthy thought.

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All that said, I’m up 24% YTD. But, I struggle between “being up 24% in three months is amazing” and “how much better COULD I be doing?”.

Careful! The enemy of good is perfect!

I’m certainly not the GOAT, but have found success in part of the David Gardner mentality- reinvest in your winners and don’t double up on your losers.

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All that said, I’m up 24% YTD. But, I struggle between “being up 24% in three months is amazing” and “how much better COULD I be doing?”.

Careful! The enemy of good is perfect!

Definitely. That’s a great thing to remember.

Also, just to clarify. I realize that my fleeting thought outlined above is a little ridiculous. Just acknowledging that I’ve had it. I’m human, what can I say. :slight_smile: I’m guessing I’m also probably not the only one that’s had amazing returns and have seen other folks post bigger ones and thought…“Ooooo how can I do that too!”

It’s all part of the constant journey to becoming a better investor.

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Thinking you should aim to do better than that might be pure folly.

Without question. Just acknowledging out loud that I’ve had the thought. I think there’s value in that in a “Know Thyself” kind of way.

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Tim, it seems your recent posts are exactly what you were complaining about in others. Please consider this in the future. I know you got a lot of rec’s on that post but it really offended me. I like hearing what people have to say as long as it is a thoughtful post about investing.

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Hi Hydemarsh,
Sorry to have offended you or anyone else with that post. That was the furthest thing from my mind in making that post the other day.

I’m mostly here to learn continue to learn to better manage a concentrated portfolio and to study the growth companies that are discussed here.

I thought this thread was a conversataion along the lines of learning to better manage a concentrated portfolio. But, I can see how these posts can be viewed as noise. Point taken.

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Been investing solid for ten years and was off and on since 2004
Missed everything great
Apple Netflix you name it
Wiped out in options
Lost almost everything in 08 from bad financial advisor
Lost almost 80% of one account and 2/3rds of another trying to pick stocks. Even using MF SA and RB
I Make my own decisions and have been around this board a few years now.
I’m up 40% ytd in one account that was up a hell of a lot last year
And almost back to even in my account that was down 80% just from buying shop at 43$
Almost back to even in another that was 2/3rds down from buying ANET around 90$
Of course I thought I was so smart and jumped out of it into aaoi for awhile and missed part of anets rise
Point being, with the wisdom of this board I have finally found an investing home.
Thanks Saul for all that you do and Thanks everyone else for enlivening this board.

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