With great respect to incredible knowledge and wisdom that you bring to this board, I am curious to ask this question to get myself better.
I have seen you move incredibly fast when numbers do not support future stock price appreciation.
I am trying to better grasp this, as from Fool cofounder Tom Gardner and other great investors, I have read and understood that a quarter or two is not a decent enough time to give management to prove themselves and a year seems to be somewhat accurate time to make a decision to exit a business, if numbers and story does not align. Fool preaches 3-5 year hold due to long list of stocks and that to me is too long a time for a concentrated portfolio like most people here.
I understand that you do not look at returns on investments that you have exited but just for my sake of understanding want to bring these up. Over the last 2 years, I have seen you exit Zscaler, Trade desk, Twilio, MongoDB, Elastic, Alteryx, Zoom as they have all suffered growth deceleration for a quarter/to few quarters. Zscaler, Trade desk, Twilio, MongoDB and Elastic came back strong and back in accelerating growth mode.
So my question comes to: Should we give 365 days time when dealing with some of the best businesses in the world having the best management teams to handle temporary set backs? or Is it your concentrated portfolio approach that warrants taking ‘hope’ out of investing equation and getting back to crunching numbers (Revenue growth, margins, management team, moat and market opportunity etc.) and moving onto current best that can sustain its growth based on data at that point?
My question comes from my mindset that: Winners continue to win. They may go through temporary setbacks but winners most often find ways around to keep winning. Should we give them more time in our portfolio?
Appreciate your insights and I am sure your inputs are going to help a lot of us in learning and getting better at investing.
If I have stated anything incorrectly, please pardon me. Again, I am posting this with great respect for you Saul and the great team that we all can access for free.