Philosophical Question - SHOP

So that repeated question comes up again, do you sell your winners?

As most know I currently only own 2 stocks (SHOP and NVDA), now 3 as I am trying TTD on at present. DO NOT COPY THIS, I have spoken in volumes as to why this is my current holdings. Doesn’t matter for now.

The question is, is that many sell off their winners in order to better balance their portfolio.

(1) easier to do if your in a tax free account, much harder to do if you are not.

But my conjecture is that one should do the opposite. Sell off losers, keep and buy more of the winners.

Yeah or nay?



But my conjecture is that one should do the opposite. Sell off losers, keep and buy more of the winners.

Yeah or nay?

The answer is it depends. Depends on individual situations and risk tolerances. But I think it depends the most on how you define a winner and why you have a winner. If it’s a winner because the stock price went up then you have to evaluate whether the price move is justified or unjustified based on your view of future growth and valuation. Let’s take 2 examples:

The price is up a lot today. But the business is still accelerating. Merchant adoption is accelerating. The numbers are not really slowing down. They are adding more and more capabilities. There;s no real competition and I would say it’s almost too late for a competitor to be successful unless they enter a completely new geographic market where SHOP’s offering does not currently fit (e.g. in China). Today’s price increase (IMO) is completely justified. So I would say SHOP is a winner in stock price appreciation because it’s a winner in the market for getting merchants to sign up and because it’s a winner in their financial results. So in this case, I would add and not trim or sell any even if I already have a very large allocation. In fact, I was able to add some shares yesterday and I was able to recently sell some puts to buy leaps thinking their results would be good.

Back to WIX. Are they a winner or a loser? They price dropped after earnings but their business growth didn’t slow and they are adding features to attract and retain more customers. Their CFFO grew by about 150% from the prior year and it’s guided to grow 85-88% this year. So they are a winner in the market, a winner based on the business metrics, yet a loser in the stock price. I had a small trading position before earnings and bought a nice sized chink after earnings. Unlike you, Tinker, I can’t put 50% of my money in one stock and WIX seems like a good place for some of it.

Now a comment on allocation and concentration. Firm specific risk is real so there’s always a chance, however small, that a company can go out of business or have some catastrophe. The two companies that you own, NVDA and SHOP, seem like great picks to me. I read about their founders and heard them on the conference calls. I can “hear” in their voices that they are not crooks so I would not be worried about any malfeasance with these two companies. But Tinker, you have done extraordinarily well with your portfolio being invested in them. You can afford to buy us all a round!



But my conjecture is that one should do the opposite. Sell off losers, keep and buy more of the winners.

That is the best approach IMO and one that I follow.

do you sell your winners?

Hi Tinker,
I don’t EVER sell my winners just because they’ve gone up. I trim if the position has gotten too big, or sell if the story has changed, or even trim a little if I think the price has overshot significantly, but I’d never sell out of a position because it’s doing well.


I think I have heard David G. say multiple times on the Rule Breaker Investing podcast that you should “water your flowers and trim your weeds” rather than vice versa.


I like this quote volfan…it’s what I do.

One loser I was looking at this morning was Fireeye FEYE…I’m waiting for them to get bought out but I’m thinking that’s going to be a long time from now.

Don’t own SHOP wish I had bought it when I bought FEYE.


…trim a little if I think the price has overshot significantly…

I’ve tried this (trimming when I thought the price overshot), and it has always turned out to be a mistake. I realize I’m not good at identifying when that is, so I’ve stopped doing it,


A lot of “professionals” take profits when certain, pre-established targets are met - in other words, they plan on selling their winners before they even buy them. They sell their losers even more rapidly.

I personally, having learned a great deal mostly from this board, never sell winners simply because they are winners. In fact, I never buy a company with a price target in mind to begin with. But, I do trim when a position begins to dominate my portfolio. It’s hard to say exactly when domination occurs, but a heuristic I use is 15% of my total portfolio is when I start getting uncomfortable with even my best performing stocks. However, I never trim unless I’ve first planned where the money is going to get reinvested.

I think Chris hit the nail on the head.

I wish I sold my ‘winners’ at their peak in AMB, DDD, and SWKS. At least SWKS has come back. But the other two were very much story stocks riding a wave of hype. In hindsight, a very obvious good reason to sell. I’ve made good profit on riding this wave of air, time to sell. crash, Saul managed to see the hype and avoid the losses.

SHOPIFY appears to be an amazing company, generating lots of cash and all its metrics are going up and up. Very positive. Very real. My position has also become outsized but I’m holding.

NVDA is slightly different. There definitely is a huge amount of hype about its future. It is generating real profit now. So it’s less likely to crash like DDD, but its future potential may be hampered by unknown future competition, or just the promises of growth never actually being realised.

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My investment strategy is heavily influenced by O’Neill’s CANSLIM. O’Neill’s research has shown that the stock of companies with winning products and services can continue to increase in price for years. It further shoes that the greatest gains occur when a stock is at or near all-time highs.

The core of the CANSLIM philosophy is cut your losers fast and let your winners run.

When to sell? When the stock falters, the market corrects or turns to a bear, or the company or market changes such that your original reason to invest in the stock is no longer valid.

Every really good or great investor I’ve ever read about let his/her winners run.

Of course, the challenge is great if a winning stock that’s 30% or more of your portfolio sells off 15-20%… what to do then? That, I believe, is where the individual investor’s temperament and philosophy must weigh in.

May you all have such a problem… and soon! :slight_smile:


Would like clarification on your thought, I am old and slow. Are you wishing that the followers of this board have great gains so that we can experience a pull back and test our conviction or are you wishing for a 15 to 20% pull back in SHOP. If it is the latter, what makes you think a pull back of this magnitude is on the near horizon?


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