First off Saul, Bear, stocknovice, GauchoRico, and the other posters on this board have changed lives. Thanks to all you do.
Like many others I would like to contribute more but I don’t have much to add. Except in this instance.
Whenever one of the hypergrowth stocks the board follows starts to see even a whiff of deceleration (that is reason for concern) in revenue, some will sit tight, and hope things turn around. As Red says in Shawshank, “hope is a dangerous thing, hope can drive a man insane.”
For this hypergrowth stock strategy to work we must always be culling the herd. When we’re let down, we must take a cudgel to those stocks whose revenue growth is slowing and reallocate to stocks we have higher conviction for.
Those that elect to make excuses for the slowdown fall into 3 camps as I see it:
•Have fallen in love with the stock
•Aren’t following Saul’s methods exactly
•Don’t have any better ideas to allocate the capital to from the now slowing revenue stock
It’s important to always have 2 or 3 new ideas locked and loaded for new funds. Maybe those 2 or 3 new ideas are adding to stocks already owned.
This week when SNOW started its slowdown the easy part was unloading it. Maybe that’s just me. The tougher part was right away knowing which stocks those funds were going to be allocated to. I find it’s easier to keep a bad investment if I don’t know of a better place for the funds.
Always have a plan for when you must cull your herd. You’ll likely find yourself with better returns because in the end our number one job is to protect our capital.