I would like to learn from Saul and let go of winners that have had a run.
Hi Flygal, I’m afraid that is a misinterpretation. I definitely DON’T sell winners that have had a run (not as a policy, anyway). I only sell if I have a specific reason (as I did when KRED was up 70% in one day). Here’s a relevant quote from the FAQ page modified slightly to bring it up to date:
* I tend to sell a piece if my position has gotten too big for me to be comfortable with. (Usually, that means more than 10 to 12 percent of my portfolio. However, years ago when I was still working, and could add funds to replace losses, I seem to remember letting rare positions get to 20% if I was in love with the company).
I tend to sell a piece if I feel the price has shot up wildly. I did that with TSLA, selling half (at the time). On the other hand, BOFI had gone straight up for 5 months since I bought it, but my position wasn’t too big, the rise wasn’t too fast or with lots of hype, their revenue and earnings were moving up, and the PE was still well under 20… so I added multiple times along the way. In other words I don’t sell just because something is going up.
I tend to sell a piece if I feel the story has changed. I’d had IPGP for a long time but they seemed to be turning into a slow grower, so I’d sod out. I sold out of AAPL as it seems to be becoming a value play instead of a growth play. I sold out of ISRG because of all the bad publicity with the head of the GYN Association saying it was overused and of no additional benefit. While they will continue to do well I figured that hospital boards would hesitate longer before buying a new machine, and with a high PE, a slow down would drop the price (which is what happened afterwards).
In general when I’m thinking of selling I seem to usually sell a little first while I’m evaluating, then decide for sure what to do. I might even decide to buy back the little piece I’ve sold if I reconsider.
* Trading in and out is self destructive. You remember the trades where you made a few dollars and it encourages you, but you forget the losses. Never take a position to make a few percent. You should be investing in stocks that you can see at least tripling, if not going up ten times.
* I always buy with the idea of holding indefinitely, never with the idea of a short holding period, but in practice I guess my average holding period is six months to two years. I sell when I’ve fallen out of love with the company or I think the story has changed, or I think that the price has gotten way out of line.
By the way your remarks about typing really are interesting from a gender point of view. I understand your mother telling you not to learn to type because it would pigeon-hole you. On the other hand, I type with ten fingers and have always felt it to be a valuable skill, but being a male I wasn’t in the same danger you were in. I don’t know how I’d get along without it, writing books and articles. Maybe your mother should have told you to learn to type but NEVER let anyone at your workplace know that you know how.
As an interesting aside, I’m always amazed my my “muscle memory”. If you were to ask me where the letters are on the keyboard I truly couldn’t even tell you one, my brain doesn’t know, but my fingers know and find the correct keys when I’m typing. A mystery.
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