I received the following off-board and thought I should answer it where it could be of benefit to others as well:
I have 30 or so stocks. I find trying to pare them down to be hard. Any advice on that?
Well, your chances of finding 10 stocks that can go up 40% or 50% per year are enormously better than your chances of finding 30 stocks that can go up 40% or 50% per year, and your chances of finding 50 or 100 stocks that can do it are probably zero. With 50 stocks, most people can’t even remember what all the stock symbols stand for, much less exactly what the companies do, or what their results were last quarter, and reading all the conference call transcripts and getting something out of them would be nearly impossible.
What some on the board have recommended is decide which are your highest confidence stocks, and then which are your lowest confidence stocks (the ones you are holding just because you bought them some years ago and don’t want to admit you were wrong). Now sell the lowest confidence stocks and put the money in your highest confidence stocks. Rinse and repeat until you are down to a reasonable number of companies.
Another question, paraphrased: What are your expertise and qualifications?
Answer, I don’t have any. Just 30 years of compounding over 25% per year (which could have been all luck, as some have claimed). Read the Knowledgebase (all three parts) linked to in the right hand panel on every post window, and then go on to the other links in the same panel.
What are your expertise and qualifications?
If only you had an MBA in Finance from Harvard and a Phd in Economics from Oxford and wrote a 1,000-page white paper explaining the historical significance of stock market appreciation during inflationary, deflationary, recessionary and depressionary environments around the globe from the Peking Dynasty through the industrial revolution around the bend into the Modern Era with a special emphasis on the effects of algorithmic programming on inverted bond yields when crab pots fill up on the Cornelia Marie. And, of course, referred to yourself as a “quant” while posting photos of your magnificent beachfront property on Twitter while hosting a top-rated podcast.
That would be so much more impressive than picking winning stocks for years, articulating the overall methodology, detailing the rationale for every single pick, month after month after month, and sharing everything you do with all, for free.
Thanks, BD , kind of you to say. But don’t forget that I get a lot of help from all of you on the board.
Since I sent the question to Saul, let me say I was asking about his expertise as in what did you do for a living. He should’ve been a hedge fund manager but I picture a doctor of some kind.
As for the large number of stocks, that comes from following a TMF service. Now that it’s ending, time to pare down to a top ten. Thanks for the advice Saul. Always appreciated
30 years of compounding over 25% per year (which could have been all luck) 30 years pushes the boundaries of probability. It’s mostly skill but some luck thrown in too (Yellowstone did not erupt, etc) Unlike many other activities even the highest skill levels in equity markets does not assure continuous success. The stock market is a poster child for periods of randomness and irrationality but after reading your posts for years I do not doubt your skill level.
qualification" is meaningless in the stock market. People can (and do) get the highest degrees from the best universities , pass many exams, and still flop as investors.
I look for a combination of confidence level (ie the likelihood that I understand all of the factors involved well enough to make a reasonably informed guess) , the specific company analysis, and the probable durability of their success. You have to have all three right to make the big bucks and it isn’t easy.
An uncanny knack of when to get out and not look back plus use that money elsewhere. Plus allocation of funds and making sure that he has enough money to last at least 3-5 years. Never fall in love with a stock regardless(NTNX anyone?)
There is only one book of learning. His. It’s called the
We all need luck but skill and deep insights into understanding what the Company does and how it does it through hours of learning trumps luck. Good Post Dan and thank you Saul.
you are too modest !!!
This discussion board, your ‘knowledgeBase’ and your weekly postings are a testament to your deep insights of the market.
Thanks Saul for sharing.
You know, that is unbelievably insulting. This person wants to know your expertise and qualifications when you are sharing for free, as we all do on this board.
If you want to pay us, then perhaps you are entitled to know our expertise and qualifications.
We are not giving you stock advice, or any advice at all. We are talking about stocks and sharing freely in a crowd sourcing manner. Don’t blame us for anything you do or don’t do, and we are not your stock brokers, advisors, or any such thing.
If you want qualifications go find someone to pay.
We are here for fun, comradery, and to share amongst ourselves to better our investing. None of us are here to serve you, to have qualifications, or any such thing.
Holy crap! I’m the one that asked the question and I did NOT ask Saul about his “qualifications”. He embellished that part.
In reality, I wrote to him after he posted a response on SILk stating something like their field isn’t his “expertise”. I asked him what was is. Maybe I should’ve been more clear but all I was asking was what he did before retiring. THAT’S IT!!
I wasn’t questioning his result or what he provides. Not one bit.
Thanks for throwing me under the bus for absolutely no reason.
You know, that is unbelievably insulting.
Not necessarily, it depends on the intent of the question, it could be either
1.- Who the hell are you to…, or
2.- What do I need to learn to…
A question about background could also be interpreted as small talk and relationship building, which is OK in off boards conversations.
Holy crap! I’m the one that asked the question and I did NOT ask Saul about his “qualifications”…. Thanks for throwing me under the bus for absolutely no reason
Sorry Smokey, but I don’t know what the heck you are talking about. What I wrote to start this thread was (and I quote): “I received the following off-board and thought I should answer it where it could be of benefit to others as well”
I have 30 or so stocks. I find trying to pare them down to be hard. Any advice on that?
Thus in my post you were totally anonymous and I didn’t mention you in any way, or give any clue to your identity!!! How were you being thrown under the bus??? I often answer useful questions on the board like that.
As far as the second question, you wrote, starting your email, and I quote:
Saul, Just curious, what was your expertise?
That’s all. NOT “What did you do before you retired?” or anything like that to explain it. In my post I responded: “Another question, paraphrased:”
Here’s what paraphrase means: express the meaning of (the writer or speaker or something written or spoken) using different words, especially to achieve greater clarity, … so I made clear I wasn’t using the exact words of the question.
Again I responded keeping you totally anonymous, and you have the nerve to tell me in another off board email just now that I owe you an apology!!! And I should call off my dogs??? …Just to be perfectly clear, In my post you were totally anonymous and I didn’t mention you in any way, or give any clue as to the identity of the person who wrote to me off board!!! You were the one who decided to give your identitiy to the board. That’s your problem, not mine.
I can appreciate why smokey felt the need to clarify in his first post above that he was just asking about Saul’s experience, despite having originally been kept anonymous. That seemed like a good response and should have ended it. Tinker must have just missed that message when he responded, I can’t blame smokey for then having to defend himself (I almost certainly would have replied again at that point if I was in that position).
I don’t think anyone had any bad intent here. We are quick to encourage someone to take questions like this off-board, and that is exactly what smokey did. Maybe he could have been clearer in the off-board message, but not the end of the world.
Saul obviously has to deal with a lot of unfair criticism and questioning, despite laying everything out there in the knowlegebase and regular updates, which he is so generous with his time, to provide, so I can appreciate where he is coming from here too.
Thanks mekong, it seems to have been a misunderstanding all around. I shouldn’t have reacted so forcefully, but when someone sends me a personal email to tell me that I owe them an apology when I never identified them in any way, I guess I just got carried away. I should know better.
Thank you for being the voice of reason on the board. You did save smokey’s neck and all of us from further drama.
Sorry this was supposed to be a private message to Mekong, I don’t understand how It got posted on the board.
Yes, thank you Mekong. I apologize for my reaction. I know my initial intention was to get to know Saul better as a person. Not just the investing guru he is.
It was a misunderstanding.
Best to all.
With all due respect, had you not identified yourself there would be no bus to throw you under. I take what Saul states with great credibility. I have no idea who you are or why you even identified yourself. But whatever.
Let’s end this thread.
I think the reactions from multiple people were from not fully reading the thread and having all the context.
I had a nice reminder to assume best intent and give people the benefit of the doubt recently.
I’ve traveled a lot in some pretty bad places and through experience have learned to be very distrusting of cab and even Uber drivers. Last week on my trip home, a cab driver ended up missing a turn and I immediately went into defense mode, thinking it was the same type of thing I have experienced before. A driver trying to rip me off or potentially taking me to a dangerous place.
I even said, “what are you doing trying to get more money from me?”
That comment seemed to hit the driver at their core and they responded “why are you so mean? Life is about far more than money”. They then tried to pay me $10 out of their pocket which would have more than made up for the mistake.
I declined the money, paid, and went on my way.
I’m embarrassed by my reaction and how quick I was to jump to conclusions. I guess the lesson is to know when to pick battles and when to give people the benefit of the doubt.
Let’s work on giving people the benefit of the doubt a little more and focus our efforts on finding awesome growth companies and keeping blatant detractors from spamming the board.
Thanks for your understanding everyone.
I just realized I responded to a thread that hadn’t been commented on for 3 days and was probably already “ended”… oops.