Wow, another gut punch this morning as I’m an owner of some FOSL shares.
I know it’s not a stock discussed on this board much as it doesn’t fit the criteria for a “Saul stock”, but still, another over 30% decliner in a DAY! I’ve had at least 5-6 of those this earnings season alone! I don’t ever remember so many drops like that in such a short time frame.
I guess luckily for me (at least when things are going down), I’m still too diversified with over 50 positions and most of them well under 3% of my portfolio so a 30% hit on one stock doesn’t hurt too much.
When I started reading this board I wanted to narrow my picks to under 30 stocks (mostly to make them easier to follow), but didn’t get around to that level yet. I have reduced some as I was over 70 stocks for a while.
I’m just not confident enough in my stock picking abilities to get any more concentrated than maybe 25-30 stocks at this time. It will probably take me a couple more years to even get down to that level.
But, I stay the course, and picked up 2 more partial positions today in stocks I already owed that I think have been hit way too hard (SEDG and GPRO). Long term, I know I’ll be OK.
Mike, with 70 stocks in your portfolio, do you simply track the S&P 500 in terms of performance? Can you beat the market with that many stocks?
Yes, you can beat it, just as most of the MF services that have been around for a while do (just no where near as much as Saul has!). I’ve been subscribed to 2 MF services since 2006. Just as they do, I have a few really big winners, a lot of average stocks and a bunch of losers!
Once I found Saul’s board, I wanted to move a percentage of my holdings into more “Saul-like” holdings.
FWIW, it looks like you are new to posting on MF, I’m not sure if you’re new to investing as a whole, but my one recommendation (if you are new) would be to take it slow. Don’t throw everything you have into “whatever Saul’s doing” even though he has enviable returns, what he has done is not easy (without a lot of discipline, intuition, and/or investing intelligence), and can’t be duplicated by most! That being said, I am making an effort to skew part of my portfolio to be more Saul-like (less stocks, more money in high-conviction stocks). I’m a pretty slow mover, though, I won’t just sell everything and reallocate it, it will take me a while.
I will find it hard to invest even 10% of my portfolio into just 1 stock (although some of my positions have GROWN into that size). The funny thing is this is coming from a guy that at one point had over 90% of our net worth in 1 stock! This was because of company options and stock purchase plans. Luckily that all worked out for us.
It is unarguable, from comprehensive studies done on mutual funds, that it is extremely difficult to beat the S&P over a realistic investing timescale, say 15 or 20 years. By that time, perhaps just one or two managers are left standing against the index which unfortunately is just what random chance would predict.
Many investors make the serious mistake of assuming that therefore all they have to do is buy a market tracker or ETF at any time. I am astonished that people like Buffett and Bogle do not correct this impression with the utmost emphasis when they advocate the index for ordinary investors.
Like everything else, you must only buy the market when it is cheap, preferably very cheap. Since it is very cheap only two or three times in an investment lifetime, it is essential not to miss that opportunity but to buy down with both hands and never touch the investment again.
The corollary is that you must know when the market is cheap. Buffett’s fatuity ‘Be greedy when others are fearful…’ will not help you. How fearful? Too early will be a disaster; you will run out of money before the bottom. The essential thing is to be able to average down all the way, delighting in every drop and then, when there are finally no further falls, continue buying for a month or two.
I offer this up to you as a gift. It is the one thing every investor should know. I do not mean to be dramatic but it is a shame so many investors miss the opportunity of a lifetime when it comes.