Many of your buy analysis recommendations are pretty standard suggestions and yet you have had superior results compared to every other money manager who also knows these same rules. I see you essentially get nearly all your stocks from the MF landscape that have essentially been “prescreened”. You then apply your buy rules (standard advice) to that MF pool of stock suggestions. It would seem if your buy analysis is pretty standard advice, to what do you attribute your superior results (ie, what do you do that every other money manager can’t seem to do)?Care to add more color to your sell decisions?
Hi Duma, I’m thinking about it but we have my daughter visiting and thus I don’t have the time to give you a good response. I was thinking though that most of what I do is contained in the Knowledgebase and the rest is probably intuition and experience.
As I read further on the thread I came across what Tamhas had written and I thought that this part was apropos It seems to me that we have people asking Saul if he has some kind of secret sauce. The FAQ covers some of that, of course, but often people are not satisfied with what they get from there. I suspect the answer is partly what he has communicated and partly what is impossible to communicate. There are some screening metrics which have been communicated. There are the insights that come from intelligent, dispassionate, exchanges of viewpoints among the participants of this board, which we all share in. But, in the end, there is a decision to buy certain companies where the story resonates. By the same token, on the sell side, there is a combination of the circumstance of wanting to liberate money for something else or feeling like the story for a company has changed or feeling that the picture one once had of the company may not have reflected all the information one now has. And, again, there is a very individual decision to sell. I shortened that but I felt it captured it pretty well.
He went on to say there is a part that isn’t teachable. Well, sure, everyone is going to have their own intuitions, idiosyncrasies and personal ideas, but I think that the overall idea is teachable, as many people have written in that they are already having much better results than they have ever had in their lives.
I also disagree with your assertions that my buy decisions are pretty standard. For example, I don’t buy the very high PE stocks and the no earnings (yet) stocks that RB likes. I don’t buy small amounts of 150 stocks as Stock Advisor would have you do, etc. I do work on the basis that there will always be lots of good companies, which were very good holdings, that I never got into. I also make what I hope are transient mistakes, which I go ahead and get out of, and then are sorry to hear that there are people on the board who have stubbornly held on, always with hopes for the future turn-around (which, I’m sure may come for some of them: “Heck, NFLX came all the way back and more, so why shouldn’t I hold on to this one?” I actually think the bizarre NFLX crash and comeback damaged the reality perception of a generation of MF subscribers.)
As far as selling, I believe I’ve told what I do. When I think a company has reason to be sold, I usually sell it gradually unless there is an urgent reason. I then sometimes change my mind. For instance, when Supernova gave their long rational for selling a third of their AMBA I got worried and sold a bunch of mine, then thought it over and decided it was silly, and bought back most of what I had sold a day or two later at (I think) a dollar or two higher. So I am certainly not perfect.
Best,
Saul
