The recent discussion on HDP is interesting to me in how quickly Saul sold the stock after having gotten into it, then quickly buying back, and then pretty quickly, selling again. All well within a half year.
So, just how important to success is nimbleness? Saul makes many more trades than I do in any time period. He often builds a position with multiple purchases (something TMF universally recommends), then sometimes sells when it seems appropriate, only to buy back later (often at lower prices). Sometimes he doesn’t sell and just buys more, too. I’m well aware that he calls this “Modified Long Term Buy and Hold,” but it does strike me that it often ends up more short term than long term sales. Which is fine, obviously, as Saul makes good money with his method.
Just out of curiosity, have you Saul (or anyone else who runs your numbers) done an analysis of what percentage of your sells are tax-advantaged capital gains sells? Is it less than 50%?
I want to be clear that I’m not criticizing anyone here, especially Saul. I’m just trying to understand his method better, and to figure out how much of this nimbleness is essential to being successful with his method. For instance, I’m on record here back in Feb about being against HDP as an investment. My thoughts were not the hard numbers that Chris and Saul have presented to us, for me it was the business and the competition and also how people were viewing and pigeon holing that competition. Anyway, my hesitancy prevented me from being in a stock when the consensus now is not to be in that stock, but it also means I didn’t make the money Saul made getting into the stock and, as he put “got lucky.” I made less keeping the money off the table in cash than Saul did buying HDP.
I know Saul doesn’t ever go into a stock thinking short term, but it does end up that way sometimes. Being nimble seems important to his method. I’m not nimble by nature. I buy in tranches as well, but if I sell some/all I almost never buy back again. Am I hurting my results?