In the Knowledgebase I pointed out that I like to add to a position when a stock is going up on good news, as it means that the thesis I bought it on in the first place is proving itself, and that waiting for corrections to add sounds smart but can make you miss a $200 gain because the stock never went down $1 to the price you had your heart set on, before it started up again.
In my end of the month summary I pointed out that I made my big money on the companies that were up 250% or more since I bought them, and that the people who run to “take a profit” and sell their position when the stock is up 40% or 50% will never see a 250% gain in a company.
Well Upstart announced these spectacular results Tuesday after market close. They had closed Tuesday at $135.68. I bought a bunch in the aftermarket at $158.50. Then the price pulled back and I bought an equal sized bunch at $155.90 (Averaged to $157.20). That was up $22.50 already from the close, which itself was already up from a week and a half ago close at $120.80. I have to admit that I was a bit taken aback, but what could you expect with results like that. I added a tiny bit more during the regular session Wednesday at $163.10 and left to do other things. The price had settled back and was hanging around $160.00. Some on the board were talking about “taking profits” in the middle of the day on Wednesday (about a $160 price), and about “valuation” being high. Believe it or not someone was even using TRAILING twelve month revenue to prove high valuation with a company that is tripling its revenue !!!
Upstart closed Wednesday at $171.20.
Right now, Thursday, the price is currently at $185.50. That’s up over $28 from my $157 purchase Tuesday evening !!! That’s that $157 price I was take aback by because it was already up $22.50 from the previous close. That’s what buying rising companies on extraordinary good news gets you! No way I’d sell a share. I agree with what Gaucho Rico said. UPST is likely to be the most likely of my positions to 10x its share price the fastest. Definitely not selling a single share.
Will the price oscillate? Hell yes! Will that worry me? Not unless the numbers turn bad.
Links to the Knowledgebase for this board is in the Announcements panel that is on the right side of every page on this board. (It’s in three parts)
For some additions to the Knowledgebase, bringing it up to date, I’d advise reading several other posts linked to on the panel, especially “How I Pick a Company to Invest In,” and “Why My Investing Criteria Have Changed,” and “Why It Really is Different.”
I also added at $157.5 in the after hours on Tuesday after seeing the report and how much of a blowout it was. I had made a plan that if revenue was anywhere near $200M and if the full year revenue raise was good (it was) I was going to add. Having a plan helps me make a wiser decision in the moment. I once heard not to trust your future self to make a wise decision in the moment. This stuff is certainly more or less second-nature for you, but I’m also sure you make plans to help guide your decisions. It’s certainly helpful for those of us who are still learning.
Just from being on the board I learned I would miss out if I was waiting for it to get back to a certain price. I wasn’t around early in AH, so I didn’t add until it was $165.00, but I was also lucky yesterday and added a lot when it dipped to $159.50 I still have a ton to learn, but I’m getting there.
Saul - I’m new here. First, thank you for all your incredibly valuable insights. When you decide to add to a position, how do you decide from where to raise cash? In this case when Upstart reported great results, there was no news from other companies thus no new information for you to change your conviction in your other holdings. So do you usually sell your lowest confident companies or stocks that have gone up faster than others to rebalance weight?
When you decide to add to a position, how do you decide from where to raise cash? In this case when Upstart reported great results, there was no news from other companies thus no new information for you to change your conviction in your other holdings. So do you usually sell your lowest confident companies or stocks that have gone up faster than others to rebalance weight?
Since I have no new income coming in and live entirely off my investments, I usually need to raise cash by selling something. It’s usually from my lowest confidence position, although I may occasionally also trim the edges on a large position. That probably doesn’t help you much, but it’s the best I can do.
Relatively new here and have only read through the Knowledge base once so far, so I have my work cut out for me. But I thought I would add 2 cents to this page:
Saul’s knowledgebase and his actions with Upstart totally align as his message after UPST earnings indicated his confidence in the company increased compared to his other holdings. So, he probably sold off one of his holdings to buy more of UPST. I have my assumption about which one he sold off and why and am writing it down - to check myself against his decision at the end of the month. What am I trying to do here - test my ability to take an action based on the information available to me. The information available to Saul is the same that it’s available to me. So the skillset I am trying to develop is to digest the information and take action (this is Saul, Muji,Bear, Stocknovice and others secret sauce).
Where am I in the process: when I stumbled upon this board, I owned over 120 stocks and I had only 2 stocks that accounted for more than 3%. I had been beating the S&P 500 throughout my investing time, so gave myself a pat on the back. As I dove into my Portfolio, I found that I had over 10 stocks that were lagging S&P500 over 2 and 3 years and in one instance 5 years. This board helped understand, not just impact of the underperformance of the stock but also the opportunity cost of the underperformance. So, now I am down to 80 stocks and still in the process of scaling back the number of stocks I own and testing my conviction on the stocks I am keeping. Based on the knowledgebase and the collective wisdom, I am changing my approach - creating MY approach to investing. I don’t think I will ever get to Saul or Bear - but also need to give myself time to create my approach. If yes, then increasing my ownership in those companies. What’s the total number of stocks I will own, I do not know.
But I will get there.
Long UPST (4%), ZI (3%), TTD (5%) - companies that are discussed on this board and have at least 3% in my Portfolio.
Just in case anyone doubted Saul’s excellent post… Upstart is now in the $220 range. This was good advice two weeks ago and is good advice now - buying great companies as they go up is a smart thing to do.