I sold Mongo today on the good news

Investment Analysis Clubs Saul’s Investing Discussions
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I’m not saying that the overall thesis for Mongo has changed, but I thought the price was already on the high side before the latest good news. The jump was a good opportunity for me to take some profits, and wait to buy back at a somewhat lower price.

It would be different if the jump had to do with recovery from the alleged bad news from alleged competition from Amazon, but the share price had already recovered from that.

Many of you will say, “There won’t be a lower price!” And you might be right, but I will take that chance. If I’m wrong, and you make more money on Mongo, I will not begrudge you that. It will just add to my learning about valuation.

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Can you remind me how fast Atlas is growing? :cry:

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The jump was a good opportunity for me to take some profits, and wait to buy back at a somewhat lower price.

We’ve all heard that story and it seldom goes anywhere good. Enjoy paying your cap gains taxes.

🆁🅶🅱
wordlessly watching, he waits by the window and wonders…

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I cannot predict the future. I just know Mongo was extremely overvalued at $17, $40, $60, $80, $100, and now $134. Sounds a lot like a certain company called SHOP.

Tinker

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“cap gains taxes”

Not when in an IRA. I only wish, though, that I had more in my Roth, even if it meant less in my regular IRA.

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The time for you to get scared about MDB is if I see it keep climbing, and decide to get back in to catch the wave.

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The time for you to get scared about MDB is if I see it keep climbing, and decide to get back in to catch the wave.

How do I find out when you decide to get back in to catch the wave? :innocent:

There are some cases where the stock price shoots up so fast it must come down but with a company that’s growing the most important part of their business at 400% y/y (300% under 605?) that’s the wrong way to bet.

BTW, if you are in the 20% tax bracket the price must drop by more than 20% to be worth getting back in.

Denny Schlesinger

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We’ve all heard that story and it seldom goes anywhere good. Enjoy paying your cap gains taxes.

A lesson learned the hard way. Friction costs are a real thing. And all these small, “clever” adjustments only encourage overthinking and overthinking leads to actions which leads to more friction costs. That’s my experience anyway.

My new sell rule: Don’t sell unless the investment thesis is broken.
And my corresponding buy rule: Never add to a losing position, only add on the way up when the stock has proved itself.

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Hi Ed,
I guess we just think about it differently. I never, ever, EVER, sell a stock just because it’s gone up (unless it’s become too large a part of my portfolio, in which case I will just trim it 5 or 10 percent.

I never sell because of good news. (That reminds me of that mindless person who wrote on a MF board, after a stock had fallen because of had had terrible quarterly results, “Should I buy now because of the bad news?”)

Here are some relevant quotes from the KB on trying to time these things that you might want to reread.

Best,

Saul

Never miss getting into a stock because you are waiting to buy it a few cents cheaper. The decision is whether you want to invest in it or not. Once you decide, take a starter position, at least. Don’t wait around for a slightly better price. When it’s at $50, I can guarantee that you won’t remember or care whether you paid $10.05 or $10.30, but you’ll be kicking yourself if you didn’t get in. The issue is: Do you want to buy the stock? If the answer is yes, don’t fool around trying to buy it a bit cheaper. You are buying with a long-term perspective.

I assume that any good stock I might want to buy probably traded at a lower price some time before I found out about it… Duh… But so what? I can’t go back and buy it in the past. What I care about is whether the stock is a good buy now. I see too many people who are “waiting” for a price to go back to where it had been, for a lower price, a better buy in point, or whatever. They may get it and save a $1 or $2, or they may miss getting in, and miss a $50 eventual rise in the stock. Don’t try to wait for the price to go down before getting into a stock. Geez, you are getting into it in the first place because you think the price will go up, not down. If you like it and are convinced, at least take a starter position now.

I definitely don’t sell winners just because they have had a run (not as a policy, anyway). I only sell if I have a specific reason.

On trading in and out: No one knows how long a stock price can keep climbing. If you sell now at $135 it could keep going up to $200 before it takes a rest. When it was up $15 from where you sold, would you buy back in or just watch it go? And if you timed it right and sold now, and it dropped $15 would you get back in, or would you wait for down $20? And then if it got to down $19 and started back up, would you panic at down $12 and buy back in? And then, what if it goes down $10 from there? Do you buy, sell or hold? In other words, trying to time the market in these stocks will drive you crazy. If you don’t have a good reason to sell just stay with it and enjoy the ride.

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Hey Ed,
Thanks for coming on the board and publicly announcing you sold your shares at 130. You even knew you would be sniped for doing so with snarly comments.

I appreciate the honesty. Not an easy thing to do considering.

You made money, you made a decision. Might be very wrong, but might also end up being right.

Either way it’s not earth shattering, not going to effect the planet from continuing to spin.

Personally I alway hope that great companies I’m invested in tank at least once or twice a year so I can add shares along the way at cheaper prices so I hope you get the opportunity to get back in again at a much lower price.

Chris

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“My new sell rule: Don’t sell unless the investment thesis is broken.
And my corresponding buy rule: Never add to a losing position, only add on the way up when the stock has proved itself.”

Sounds good on paper, but I’ve found over the last 20 plus years that you have to also be flexible.

AMZN for example for me was a losing position when I first bought it a very long time ago. I kept buying it. I also bought on many major corrections along the way. Turned out pretty good for me.

FB I bought at their IPO and all the way down to 17 bucks, while all the reporting was thst they could never, ever monitize mobile. Hmmmmmm…sold out at 175.

ANET I started buying around 250, bought all the way down to around 185 end of last December. I think I bought 6 times, and every time it was a bigger and bigger losing position. Ouch. Ended up with a dollar cost average of 200. What 10 weeks later and the stock is around 296?

So yes I think it’s important to have your rules in place, but I also think it’s important that when opportunity presents itself and you weigh the risk reward, there can be times when it makes sense to bend your rules.

Chris

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Ed, not to belabor this, but I have to think about Shopify. I bought at $27. In about six weeks it had grown to $47. Up 75% in six weeks, clearly overpriced, right? I bought a bunch more, because it was up on good news. I eventually sold at $144, which was more than a quintuple of my initial price. And I sold because I thought that the story had changed.

Or more recently, with Twilio, I bought my position at $25.75, and bought more in six weeks at $31.00, and a lot more 2 months after that at $41.50 (that was up 60% in a little over 3 months). As you know it just closed at $129.40. That’s a quintuple in a little over one year. I never would have seen that quintuple if I had just “taken profits” on good news. I last added at $110.50 a month ago, even though it was already an oversized position, and even that little add is up 17% already.

More recently, Gardant rose from $40 to $70 on good news. That’s up 75% on news!!! I bought all I could at $70 on the good news, because I felt that it really was GOOD news. Now, just two weeks later it’s at $98, up 40% more from my $70 in two weeks.

With our companies, you have to think that you are buying great companies, not trying to grab a few percent of profits. You buy and hold as long as there is good news and the story hasn’t changed. That’s how I think of it, anyway.

Saul

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So yes I think it’s important to have your rules in place, but I also think it’s important that when opportunity presents itself and you weigh the risk reward, there can be times when it makes sense to bend your rules.

The rules are in place precisely to prevent doing what you describe. Yes, you have given three examples where the outcome in hindsight was in your favor, but what if you had been wrong?

How did you get the money to add to your losing positions?
Because if you sell something that is going up to buy something that is going down, your loss will be even more significant if the company doesn’t turn around.

How long did it take for your investments to turn around?
Opportunity costs are a factor. If it takes a couple of quarters and sometimes even longer for things to turn around, you would also be losing by not putting the new money into the companies that have already proven itself.

Anyway, my thesis is still this: Excessive churning leads to lower returns unless you know the exact opportune times to adjust your positions. Which no-one does. So rules give you a piece of mind and prevents overthinking things. And if you don’t follow the rules, they wouldn’t be rules in the first place.

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“With our companies, you have to think that you are buying great companies, not trying to grab a few percent of profits. You buy and hold as long as there is good news and the story hasn’t changed. That’s how I think of it, anyway.”

I have to echo this, as an investor my biggest errors have always been selling too early to take profits. It’s a gambler’s mentality, like you are at a blackjack table and just doubled your money, so you put half away to guarantee you break even… because everyone knows the house always wins. But that’s gambling. If you are buying a great company, with an intact story that is executing YOU ARE THE HOUSE.

Thanks to this board I invested in Guardant last year and have nearly tripled my investment thus far. I was really tempted to sell after it doubled, because “house money” and for once resisted because the only things that had changed were the story is getting better. Selling too soon has always been my problem, but thanks to this board I’ve been tempering my worst instincts.

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as an investor my biggest errors have always been selling too early to take profits. It’s a gambler’s mentality, like you are at a blackjack table and just doubled your money, so you put half away to guarantee you break even… because everyone knows the house always wins. But that’s gambling. If you are buying a great company, with an intact story that is executing YOU ARE THE HOUSE.

Thanks to this board I invested in Guardant last year and have nearly tripled my investment thus far. I was really tempted to sell after it doubled, because “house money” and for once resisted because the only things that had changed were the story is getting better. Selling too soon has always been my problem, but thanks to this board I’ve been tempering my worst instincts.

Thanks UMassHoops, and welcome to the board.
Saul

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“And if you don’t follow the rules, they wouldn’t be rules in the first place.”

First off I’m never fully invested. Never.

Second, I’m in my peak earning years and I have cash flow coming in every month from 4 and soon to be 5 restaurants. I also have cash to invest.

As for other examples. Here’s one.

I missed the MDB gains for the most part, only starting a position last November when the market was correcting.

So following your rules and not bending I would have only bought MDB once as it was falling. That’s not what I did though, I bought the stock 3 times as it sold off and if memory serves me, I built a sizable position at around 65?

Yes I could have waited for the rebound and bought while the stock was going back up, but that would have needed a working crystal ball, which I don’t have.

What I did know was that I wanted in on MDB and I saw the price falling so I built a position.

Chris

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So following your rules and not bending I would have only bought MDB once as it was falling.

Chris,

I don’t expect you to follow my rules. It seems we have different approaches to portfolio management, and my rules do not necessarily apply to your strategy.

Congrats on your Mongo-trade. I’ll keep my own Mongo-investment. Best of luck :slight_smile:

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you never sell when it goes up. In fact you buy whey you see that. However, you do sell when it goes down.

what is it that convinced you to buy it back? I think the threat of Amazon and Microsoft to MongoDB are not short term. Mongo could be just fine this quarter or next or in the shorter term but that ‘Amazon threat’ is not something you will see the impact in the next quarter or two.
There is something to argue for a longer term bear. but who knows? Mongo could find a place where it could thrive afterall even in the longer term. But who really knows?

tj

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TJ,

look around a little, do some homework, and don’t look for free hand outs…the threat of Amazon and Microsoft are not short term? Cmon…

Start with this article…maybe you will see why some are bullish on the stock…

https://www.fool.com/investing/2019/03/15/6-metrics-that-sho…

If you blindly follow others around here, you will get burned…like when you jumped on the NKTR train…

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I realized that I sold based on a miscperception. I thought that Mongo had gone up after an analyst upgrade rather than a good earnings report. Not everything I wrote is moot, but I might have held on if I had had a better idea of the situation.

I tend to sell if a stock jumps quite a lot on what I consider to be superficial good news. For instance, I sold Ulta some months ago, right after the price jumped when they announced some kind of deal with Kylie Jenner. I sold Arista the first time it went to $300 on some good news I can’t remember now, but that stuck me as something that wasn’t really going to translate into dollars and cents all that soon.

With some stocks, there’s a frequent pattern of fairly significant price increases in anticipation of the earnings report. With some of these, the price dips after the earnings report, even if the report is good. I generally disregard technical analysis, but sometimes I act on repeated patterns like this that I’ve observed for myself.

But often it’s simpler and no worse to simply hold on to something good.