Writing up my experience with Twilio a few posts back (in my post about Bert’s newsletter) brought this maxim of my investing style to mind again and I thought I’d share it. This is very simple, but very, very important to understand and integrate into your investing style. Frame it and put it on your wall!
It’s not important to get the “best price” or the “best value”. What is important is to get the best stock, which means to invest in the best company!
That’s 100 times more important than getting the best price, or getting a company with the best value, or best EV/S ratio. Just think how irrelevant it would have been whether I had bought my Twilio 25 cents cheaper or more expensive, now that it’s up 200% in seven months, compared to my decision to just buy it. That’s what counts. Looking for bargains will gain you peanuts, and it’s not the way to make real money in the market.
Best,
Saul
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Just think how irrelevant it would have been whether I had bought my Twilio 25 cents cheaper or more expensive, now that it’s up 200% in seven months, compared to my decision to just buy it.
That’s an excellent point. I’ll add that even had you waited until Twilio had doubled before buying, you still would have a 50% gain for seven months. I think we would all be very happy with that.
For some reason, I’ve had a hard time with buying a stock in a good company that has risen a lot. I believe it’s the fear that it won’t go up more because of the steep rise.
For some reason, I’ve had a hard time with buying a stock in a good company that has risen a lot. I believe it’s the fear that it won’t go up more because of the steep rise.
On that note, I will make this post here predicting that I will have future regret for not adding to my TTD position even now that it is over $120/share. I have already harped a bit on my regret in having only added to it once last fall (2017)…and yet, I again didn’t add after the massive jump in May…and at present I have sold off almost all of my positions that I dislike, and have plans requiring finding cash for adding some MongoDB shares by exercising part if a $55 call option this upcoming Friday (and likely a similar situation with Pivotal in Sept.). I have even started considering adding back more Ubiquiti the past few days.
Perhaps TTD will dip a bit, and if Tesla goes kaput in the next 5 and a half weeks, I will come into a nice chunk of cash that I would then deploy part of into TTD.
What was this post about again? Oh yeah, I am predicting my future regret for not adding to TTD as it goes up.
volfan84
Long TTD, UBNT, MDB, & PVTL
Short TSLA (but not directly via shares)
For some reason, I’ve had a hard time with buying a stock in a good company that has risen a lot. I believe it’s the fear that it won’t go up more because of the steep rise.
Chris,
I believe that is just a natural fear, the fear that you already missed out on the “good stuff”. I think the way to get over the fear is to face it down and buy into a stock that has risen. Now, I am not saying to just buy “any” stock that has risen but do your due diligence and then buy a 1/3 position in it.
That way your fear has been faced, you have a little skin in the game, and you don’t feel like you have too much at risk in case you actually did “miss the boat”.
My favorite example of this is my purchase of Amazon beginning in June of 2016 at $714/share. I proceeded to buy in $500 increments over the next 5 months and the share price steadily increased to $840 by the end of October. I believe an earnings report came out and the price initially dropped back into the mid $700s. Unfortunately, instead of continuing to buy, I proceeded to just hold. Over the next 2 years the share price has grown to just under $1900.
I guess the lesson here is that a steep rise doesn’t necessarily mean that you have missed the boat.
So true… prime example. What idiot in just over a year first adds to Amzn at $1045 and then again(can’t remember the details) when it dropped to the middle 900’s. Now that is a high price if you are purely looking at numbers as opposed to the Company.
This idiot is me. Did the same with Facebook when it took the first big hit a few months ago, sold over $200.00 and brt back in again recently…this I trade, AMZN I don’t.
It’s all relative…do the research, have a list of conviction stocks and stick with it until the story changes, regardless of the price! Still make mistakes, we all do. It’s called life…but trying to get better at making less of them and thx to Saul and the posters on this board, hopefully getting there.
Saul, couldn’t agree more. Thats why I’m swapping SHOP out and TTD in. I think TTD is one of the most important companies of our time. They are redefining advertising for the new age, being considerate of audience, and most importantly, keeping personally identifiable data out of it. This saves lives in not so safe countries and is something Facebook, Google, and others have not considered thus far.