Hi everyone,
First, I would like to thank a lot of people here for your contribution to this board. I learned and benefited a lot. Now I am in the middle of transferring my wife 401k fund to a rollover IRA account. I am thinking to have 20-30 holdings in the account. It is much more concentrated than what I have in my own account. From what I learned here, a more concentrated portfolio in the long term should yield higher returns even though it may get hit harder in the short term if the overall market turns south or there is company specific issues. I am inclined to mimic what Saul has for his top positions (BOFI, SWKS, SKX, CELG, etc), since on average, those companies have high growth with very reasonable p/e. I will then have some companies with high growth and high p/e (i.e. UA, HAIN, etc.) and companies categorized as outsiders (TDG, VRX, PRAA, etc.) I may also have some speculative stocks, in small percentage, such as SCTY, etc. I would like to see what you may suggest. Any ideas are welcome. Thanks
I like “knowledge merchants,” companies that don’t have expensive plant and equipment and credit risk but deal in information. The following list is not a recommendation, just a sample of knowledge merchants:
Your circumstances today are very much like mine were many years ago. Since that time I’ve made about every mistake it’s possible to make in investing. So, fwiw, my suggestions below are based on that painful experience.
First, if you are going to mimic someone I’m sure you realize that even the greatest investors make mistakes. If I were you I’d think about how much I wanted to put at risk to pay for someone else’s mistakes.
Second, if you are in the earlier stages of learning about investing, you probably understand that it takes a lot of time and practice to get good at valuing businesses. Think Malcolm Gladwell’s 10,000 hours. I would ask myself how much time do I have to do that and how many dollars do I want to put at risk to accomplish this learning.
Keeping those two things in mind, my suggestion is to put the majority of your hard earned dollars into an index fund. Set aside a smaller amount – an amount you can afford to lose if things go wrong – for investments where you do the research or mimic someone. As your experience and track record grows over the years, you can transfer a larger percentage each year from the index fund to your learning fund.
If you are already an experienced investor then obviously disregard everything so far. Even experienced investors will disagree with the above. As always, just two cents.
Hi Denny,
I do own some shares of FB, XPO,BIDU, LNKD and TRIP in my own account. BABA is interesting. I’ll dig deeper to see if it is worthy of my investment (quite some issues ongoing, fake products, growth is slowing, law of large numbers, etc). It is one of the biggest three high techs in China (the other two are Bidu and Tencent, Xiaomi is catching up fast though). Thanks for the list!
Hi Ears,
Thanks for your suggestions! Appreciate it!
No, I won’t blindly copy Saul’s top positions. I do have spreadsheets and semi-log graphs I created for those stocks (again, thank Saul for teaching us to do this practice). They are looking much better than the other high flyers like UA in terms of valuation. I own UA and did well with the stock, I sold some at p/e of 60ish, thought the stock is way overvalued, now it’s at 80. Maybe it will go even higher, but I am not going to chase this one, I am happy with the number of shares I own right now.
What I am planning to do is that I will take “buy in third and buy 2nd and third lots at better valuation points if I can” approach (following TomE’s famous playbook). Thanks again!