About the Abandoned Arctic Outpost #13 category

(Replace this first paragraph with a brief description of your new category. This guidance will appear in the category selection area, so try to keep it below 200 characters.)

Use the following paragraphs for a longer description, or to establish category guidelines or rules:

  • Why should people use this category? What is it for?

  • How exactly is this different than the other categories we already have?

  • What should topics in this category generally contain?

  • Do we need this category? Can we merge with another category, or subcategory?

The more I think about it, the more I am convinced that most people shouldn’t use this strategy at all. It combines managing a concentrated portfolio of High Growth companies exactly like, but engagingly different from, , a college basketball team while adding shorter term trading Trading Blocks to pre-determined core positions for additional profit. No one really needs this and its really actually sort of complicated and requires studied attention to the rhythmic ebb and flow of the market, cash on hand, courage or stupidity to pull the trigger when others wouldn’t, as well as other stuff.

4 Likes

Here is how I work Trading Blocks:

1). Maintain a small collection of High Growth companies as High Confidence core positions with established allocations. This is the easy part. I follow a group of what appears to be really smart investors who charge me money to look at their cards. I collate the data, determine common threads and recommendations to arrive at potential portfolio candidates. I then perform and excruciatingly detailed 15 minute Deep Dive to determine if the company fits my portfolio structure and goals.

  1. The portfolio is arranged as a basketball roster with the following roles:

A) STARTERS - Sorta Extremely High Confidence Companies (SEHCC) that receive the bulk of my investment funds. I typically want 70% of the portfolio invested in these companies. An example here would currently be

B) The Bench - High Confidence Companies, typically with more history behind them but still with a lot of upside potential. I allocate up to 20% of the portfolio to these players.

C) Scout Team - These companies fill out the roster and are typically ‘story stocks’ that if successful could move into Bench or STARTER roles. I allocate a maximum of 10% of the portfolio to these guys.

Ok…Ok but what has that got to do with Trading Blocks? Well…as it turns out quite a lot. By limiting the portfolio to a manageable number of companies I can stay up-to-speed, more or less, on how they trade. So, for instance, when a STARTER drops 3-5% on no real news other than market ebb and flow - it can create a short term TB opportunity. The level of confidence you have in the company along with the knowledge/familiarity you have with the companies market trading tendencies determines the course of action.

The course of action is whether to create a TB or not with the second decision being whether the TB will represent 5% or 10% of that companies core position and allocation within the portfolio. It is critical to understand that the companies core allocation is never breached by a TB. Which means that my basketball team of companies has two profiles: 1 - a LTBH component; and, 2 - the dynamics of repetitive short term gains which can add substantially to long term performance.

When I first initiated the TB strategy I only added them to STARTERS and limited them to only 1 per company. As time has gone by and the strategy has proved successful I have sometimes added a 2nd TB to STARTERS and now extend TBs to other players on the roster. A critical point here is that patience is the key. Sometimes after previous days drop a company will shoot right back up the next day. Sometimes it may take a few weeks. Regardless, TBs are designed to be the topping on a core allocation that you are comfortable maintaining for as long as it takes. This can’t be emphasized enough.

When to sell the TB is a somewhat easier decision: Whenever it makes you a short term profit that you couldn’t get anywhere else - excepting pony and dog tracks - which you then tuck away in your overall returns all the ready to be employed again in another TB when the opportunity arises.

Note: It was recently pointed out on this board by StockNovice that you can use Sell Limits to automatically collect your TB profit. I hadn’t thought of that but in my defense I do drink a lot of wine. This is both a good idea and a bad idea. (Not the wine drinking - rather StockNovice’s selling advice.). It’s really good because it totally removes the the process of constantly monitoring the TB but bad in that it totally limits your upside.

Should you try this? It depends on your own investing strategies and quirks. If you grew up as a LTBH then it might seem both the dreaded “short term trader” implications as well as a betrayer of the sacrosanct LTBH tribe and faithful. On the other hand, if you, as a devotee of the LTBH tribe, are tired of being on the market roller coaster and/or being smacked around then perhaps it might work for you.

As for the systems quirkyness - well beauty may be in the eye of the beholder but profits are safely in the bank…as it were. For further edification on Quirks and their relationship to the TB strategy I recommend:

The Bobwhite Quail: Its Habits, Preservation and Increase
Herbert L Stoddard
$449.93
Published 1950

11 Likes

I wanted to add that my strategy, simple as it is, is generally to make money. It seems to work most of the time; however, sometimes - if used with disregard for formulaic adherency and consistent consistency, it might not. Hard to tell really. Its sort of like fishing in that you have to fish where the fish are and if you don’t you might not catch any.

7 Likes

Trading Block Strategy is just like Roller Derby only marginally different with semi definitive nuances intended to boost a portfolio’s bottom line performance. And who doesn’t like that?

Consider that on a Roller Derby Team you have Blockers and a Jammer. And they all work together to do something or other to beat the other team who has its very own Blockers and Jammer. And don’t forget the Pivot which deserves its very own explanation but since this post is about the TB investing strategy would probably take us way to far off point. That would be perhaps just as confusing as generally bad.

Note on Pivot Confusion be danged: think of the Pivot as the main Guru who recommends the stocks the Blocker Pack mostly maintains; which, is a role that sort of paces the “Pack”. Simple huh?

Now here Is the point: in Roller Derby the “pack” is all sort of coagulated together in a lump just breezing round the rink - or whatever the playing surface might be called. And thats spookily similar to all the high growth kids portfolios all jammed up in the same stocks. Exactly like a clump of blockers…sorta. You see how all this is coming together?

So…despite varying levels of contracts which investors call “allocations” it would not be unreasonable to infer that since everyone has the very same Blockers stuck in the "pack: that to excel you need a swift Jammer. And remember that its the role of the Jammer to score points which is eerily similar to the function of Trading Blocks. See how this works?

To begin to add Trading Block rocket fire to your portfolio it might first be advisable to review this short video on how to get started in Roller Derby:

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwil88fY6tz_AhWPHjQIHftMAV0QFnoECCIQAQ&url=https%3A%2F%2Fwww.wikihow.com%2FPlay-Roller-Derby&usg=AOvVaw280zoBWakjxpX6QO4rKSb8&opi=89978449

Using Trading Blocks to increase your bottom line is just like playing Roller Derby without having to buy skates or skate around in circles while being body slammed or elbowed in the kidneys. It’s a win win sort of thingy, sorta - and mostly, especially for folks who have a pre-determined aversion, or perhaps an overwhelming Un -Affinity for simply putting around serenely in the freeway sane lane on the way to their investing destination - so to speak.

Remember - TBs work best when used to augment returns on High Confidence Stocks.

All the Best,

6 Likes

like my enph trading block put on last week… :slight_smile:

3 Likes

5: Exactly like that: but, you have to be willing to take the losses with the wins and experience has proven that with patience the wins far, far, far exceed the losing TBs.

All the Best,
BDH Investing

2 Likes

BDH-While this is currently sitting at a loss, I’ve elected to wait until after earnings to close as my spidy sense has no idea whether we get a pop or not. Still comfortable with the company and I’m not compelled to sell now. Kung fusilage, because I can’t post the second word of that particular martial art :slight_smile:

Dear 5i5:

When considering the TB stuff it might provide bank shot cushion to remember this:

Both Winston and Wayne were absolutely almost 100% correct - about success, failure and shots not taken. Absolutely and abundantly!

All the Best,
BDH Investing

1 Like

For the sake of closure, I’m reporting that I closed the ENPH TD opened on 6/20 for 8.4% profit. I won’t bore you with the IRR :slight_smile: