It was mentioned by a board monitor that your post is about timing, and hence OT. Well, sort of, but I think your post is less about timing and more about a misunderstanding of the investment strategy in high growth companies that meet certain criteria espoused by Saul and put into practice with varying degrees of success by followers of this board. Understanding the methodology and its application I believe to be on topic.
Let me see if can clear up up some misconceptions upon which you have based your observations. First, your examples of IBM and to an even greater extent Texas Instruments are not at all analogous to the primary focus of our investments. Saul pointed this out in his post, so I needn’t elaborate. But the primary take away here is that the focus of investment opportunities that is followed here is no simply “high growth.” It is vitally important to understand this. We have no idea what Mr. Graham may hove thought about when it comes to s/w sold by subscription that becomes deeply embedded in business operations. Maybe as “value” investor he would just consider it another growth stock - but he was no dummy. He may have perceived the unique character of these companies.
Your next misconception is the notion that Saul (and others) are …you are able to get out, before a stock tumbles as if there were some magical sign (read technical analysis) that invariably flashed before the eyes of those trained to see it, allowing them to bail on the investment just before it turned into a disaster. But, if you follow Saul’s investing (he makes it really easy as he reports every month) you will never see any inconsistency in his buying and selling. He bases his decisions on the companies performance as reflected in the quarterly CC coupled with his impression of management enthusiasm, honesty and other intangibles.
Historically, Saul does not get out when the stock peaks. Take Shopify as a recent example, Saul clearly stated (and showed the numbers) that he got out because the rate of growth had been slowing at an increasing rate. He speculated that the stock price was being artificially inflated due the pending marijuana market. There’s no magic, just observation and analysis. From a performance POV, he bailed way early. Saul does not try to time the market. The company’s performance is there for anyone to look at. Saul has the ability to separate the wheat from the chaff. He does not allow the bewildering amount of information available interfere with the obvious.
As for getting burned, a stock that suddenly tumbles without much warning, Saul’s been caught by a few of those (I don’t recall tickers off hand, but I do remember him taking losses). He’s not perfect and he makes mistakes. It’s somewhat uncanny how quickly he recognizes mistakes and how ruthlessly he reacts, but Saul will be the first to tell you that Saul has been wrong. That’s why Saul manages a portfolio rather than individual stocks. And, of course, at times there has been a sudden change of affairs for a company.You can be right, right up to the point in time that you become wrong due to new information. You can’t undo what’s already been done.
The point is that if you know what to look for you will often see indications in the quarterly reports (and sometimes interim reports) of slowing performance. When these indicators appear, Saul most often does not wait for the stock price to collapse before taking action.
The point is, the companies we most often invest in are not simply high growth, that is one of several criteria. Another point is that there is no attempt at market timing. Saul gets out of an investment when there is indication that the performance is slowing. His evaluation approach and method is the same for both buying and selling decisions.
And finally, Saul seems to have an uncanny intuition. I attribute that to his many years of experience.