chatter, musings & bs

[A fellow investor confesses to not listening to ERs nor reading financials previously for years.]

Hey, guys,

Your “confession” doesn’t surprise me much, […]. I don’t think most investors read and follow numbers nearly as closely as those of us in or around the Saul Gang. I think that long-term, good stock picking is more a matter of reading the future demand for a product or a brand or a philosophy, and with your LT holdings, you read it perfectly. Then there is always the question of whether or not they’re still in the driver’s seat for their market. Harder to tell with some than others. Take NFLX. Brilliant execution IMO, but they didn’t have real competitive threats until recently either. Now every dog in the TV/video space is trying to start competing head-to-head with the Big Dog. Surely one or more will eventually be successful, and some of them have big bucks behind them. What will that do to NFLX? Ah, that’s where the quality of our thoughts and opinions matter most. Separate the winners from the losers, so to speak.

This prompted me to consider my holdings just now and determine what changes I would make if I had to make no changes from today for the next 10 years. I decided I might kick out my longshot position in UPST, make minor changes in position weight, and leave the rest. Then I would probably Trim all current holdings by 30% and put those funds into more stable “boring” companies that don’t grow as fast but are pretty sure not to go away in a decade. I would definitely not add anything more from the tech sector. I believe in it, sure, but not to hold for 10 years with my hands tied behind my back. One just has to look at the largest tech holdings going back every 5 years to realize how the tech industry leaders change. Of the leaders 5, 10, 15 years ago, quite a few are gone or largely irrelevant now, and very few of those leaders are still leaders. So even among the “giants” we still need to have the vision to pick the right ones to hold LT, or returns just become the NAZ average. The MSFTs, AMZNs, NFLXs, GOOGLs are all easy to see in hindsight. But it pays to remember that XOM, GE and IBM were also easy to see midway in their heydays.

I went mostly by numbers when choosing companies for about 2-1/2 years, but the results were mixed (read “average” or a little better.) Then results got considerably better when I weighted my own conviction with the numbers. Finally, they took off after watching Saul from the wings for awhile. The biggest and best thing I learned from following Saul, was to buy only the best companies, period (Duh! Who wants their 21st best idea, and WHY?) Ignoring all other Saul techniques, I would have paid for the insight in just that lesson to buy only the best. So much for TMF’s “Buy 75 and hope for 5”. One disagreement I have–easy to say in this market, but I swear it’s not the reason–is that I would never leave a hyper-concentrated port unattended for years, maybe not even a month. In other words, today’s best companies are not likely to be tomorrow’s best companies–now, here’s the kicker–especially in tech!

I will probably never own 50-100 companies again. I will probably never own only 6 again either. I have never and will never, allocate funds by weighting pre-determined sectors to reach some magic degree of diversification. I want to change with the times. Not day to day, but maybe from one 5 yr period to the next.

So after all these years, I still make changes, and my overall methods continue to slowly evolve. I hope that’s a sign of being open-minded and nimble. I suppose it could also be a sign of a lack of knowledge and skill.

Older and wiser? Well, I’ve got one of the two for sure. The other is more like a work in progress, and hopefully it continues as long as I continue to breathe. No guarantees. Sounds just like investing, right?


Hey Raptor, great post! We are all on our own unique investing journey and thank you for giving us a glimpse into yours!

I was drawn to Saul’s board not due to his results. In fact, in the first few months of reading his board I was trying to figure out whether it was just some elaborate scam. I decided it wasn’t but I was still put off by the cultish feel, though I did transform my portfolio to a Saul-style one over the next 6 months. I saw Saul’s philosophy as a natural extension of the Fool’s LTBH approach. On steriods, I guess lol. No seriously, I honestly read his philosophy / knowledgebase and saw the truth in it. I still do.

In true Saul-style I need to continue to acknowledge the truth. Admit mistakes and take corrective action right away. This is the “know thyself” part of investing. Don’t fool yourself.

The truth may be that perhaps multiple were way overblown and they will never get back to that level ever again. Perhaps I shouldn’t hold on to the most beaten-down stocks like MNDY in the hope that they will recover all they lost. That time is gone. Is it a good investment now?

Saul’s last month-end review had a change in format, but also a change in focus. Saul really focussed on profitability metrics for the first time. I think he even mentioned EPS a few times. This is what I have been doing as well. Goodbye MNDY and S. Never did like NET. Keep DDOG, ZS. Re-entered CRWD. I also bought some GOOGL as I’m frequenting the BRK board more often now.

I’m evolving and hopefully for the better.


A very nice post, 5Horse.

I don’t compete against Saul or anyone else, and that’s not just a saying, I really don’t. I can’t compete against Saul. While I know many think some of Saul’s methods are [insert whatever “negative” adjective here] –and I won’t always disagree— I think somewhere within, the man is an absolute genius at investing, if one’s investing goal is to maximize gain, irrespective of risk. But it takes a mindset (read “focus & guts” if you prefer) that many – nay, most – don’t have, although they may not be aware of the fact.

Now your post brings up another major factor in using the Saul approach. Thank you!

There are endless ways and degrees of adoption that one can benefit by following Saul’s board. Unless one simply copies Saul’s port weightings 100% each month and does nothing else *, in order for an investor to maximize gains using at least some level of an outline of Saul’s methods, IMO an investor absolutely MUST dedicate considerable time to have a fair chance of winning. (Many folks cannot, for whatever reason, spend the hours required, to no fault of their own. Many are also not willing to do so, and most all of us have a limit to the time we can, or are willing to, invest.)

NOBODY SAID IT WAS EASY! In fact, many have found, or will find, some of the following tasks difficult or even impossible.

A Hypothetical
Let’s say you are guaranteed that performing any task below will increase your CAGR by at least 2%, and then the question arises: How many will you do?

Almost-Random-Order of Levels or Progress

Level I “Rookie” or “New Convert”
• Read Knowledgebase and take notes (something you don’t understand? ASK or learn, but not on that board!
• Read all ER reports as soon as available
• Listen to all ERs as soon as available
• Read & Study until you form your own opinions on companies’ leadership strengths and weaknesses

Level II – Increase Gains by up to 20%?
• Have or learn, a basic understanding of financial statements
• Never avoid being informed for more than a week or 2 (Can you say “Beach vacation?”)
• Read constantly and take notes
• Develop rules to build portfolio(s) and follow them, make adjustments slowly and with forethought (no jerky moves)
• Read every post by a few particular board denizens
• Read other boards, blogs, etc., and bookmark the best
• Spend x hours per week on investing tasks
• Surround yourself with better investors than yourself and take notes.
• Remain abreast of all industry trends **
• Stay abreast of economic factors ***

Level III – Dedicate “Whatever It Takes”
• Have or learn, an advanced understanding of financial statements and entry relationships
• Determine when “the herd” is likely to be wrong (yes, it happens)
• Stay the course, no matter what (works with all successful strategies, but REQUIRED here)
• Study industry terms, trends and current groupthink, regardless of your personal interest (e.g., “I’m not a techie by any stretch, and don’t want to be” or “I suck at math.”)

Level IV – Complete Focus for Maximum Gain
• Skillfully balance all the above with one’s own investing goals, strategies and rules
• Be willing to proffer ideas despite possible ridicule
• Be open to changing your opinions after due consideration
• Many things I have forgotten or missed (applies to all levels)

  • I would NEVER fault anyone for doing exactly that, they’re probably rich. My personality simply will not allow this. Maybe my loss?

** Currently tech, at other times, various industries (This can be extremely difficult when the industry in question is of little interest to you personally, or you don’t have the skills [e.g., “high-level math,” or “fluid dynamics”] to go beyond basic learning of the industry or the technology.)

*** My recommendation only, NOT part of Saul’s methods