(I didn’t have a better subject line.)
But reading this board and a couple others this past week, I had an “Aha!” moment, that I hope people here (Saul in particular) can confirm or correct.
If I’m not mistaken, Saul rarely if ever uses these phrases concerning companies he owns, and it’s one of two or three key tenants of his success, best I see.
(no offense aimed at anyone who has written similar sounding phrases recently.)
- I’ll hang on to see how this plays out.
- I’ll hold for a few more quarters as the story unfolds.
- Basically, anything that sounds like the company is not executing (neither is the stock price) but “the story” is still intact.
I think if Saul ever does use a similar phrase, it’s a signal to what he’s about to do (I’ve done no scientific study into past posts).
Even if I’m wrong about the above, this weekend crystallized for me what I think is a core Saul philosophy. And my version of it is this for each stock:
I don’t care how you performed for me yesterday, or how you promise to perform tomorrow (months/years), what matters is how you’re performing now. If you’re not performing, I’ll part ways. If you start performing (again), I’ll come back.
-FrickNFool
18 Likes
Another actual one one one of the paid boards, where the company’s revenue were hardly growing.
- If I buy it up a couple of dollars because a great earnings report makes it clear that the company is winning out, it will be worth the wait.
Kris
You’ve got it exactly right, FrickNFool.
Saul is absolutely cold-blooded when it comes to getting rid of stock whose best days are behind it or which is going through a period of underperformance. For most of us, that isn’t so.
I wrote something similar the other day but, to my own detriment, I find myself rooting for my stocks in similar fashion to how I root for my sports teams. The problem with that is that it becomes hard to remain objective about their prospects. For instance, being a die-hard Miami Dolphins fan, I will maintain to the death that Dan Marino was the greatest QB of all-time. On some level, I realize that might not be an objective or even correct opinion. But I have my reasons that I can cite, chapter and verse, if/when the subject ever comes up at a social gathering.
Once one of my stocks makes significant gains, I find the “bull” angel on my right shoulder shouting down the “bear” demon on my left shoulder more and more and I find it harder and harder to remain objective about the company. I find myself gushing about how smart the CEO is or how great their growth opportunity is or how awesome their product/service is.
My gut tells me this happens to most people too, which is why so many of us find it hard to sell Netflix or UA or Whole Foods after it’s made these types of momentous gains while they were part of our portfolio. But Saul doesn’t seem to do this.
Saul, if I may ask a question, how do you keep these “loyalty” instincts - for a lack of a better term - from kicking in and overruling your better judgement?
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My gut tells me this happens to most people too, which is why so many of us find it hard to sell Netflix or UA or Whole Foods after it’s made these types of momentous gains while they were part of our portfolio. But Saul doesn’t seem to do this.
I think UA and WFM will beat the S&P and will be great long term investments going forward. I don’t see myself ever selling these two stocks…
NFLX…I don’t know. I stupidly sold a covered call at $80 and never repurchased shares. It has been my single largest mistake and I missed out on quite a bit of $$$…
2001Cobra
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2001Cobra,
You could very well be correct. I do not know. They are stocks who I personally believe are presently over-valued and could see pullbacks. But I obviously could be very wrong. Either way, Saul has pointed out these are not stocks he would invest in right now because he sees greater opportunity elsewhere (and I agree).
I should have just said “Stock ABC and XYZ” so that my larger point was the focus and not the stocks I used as examples. My larger point being, it can be hard for me to let go of stocks that have performed well for me in the past but whose prospects are worse than others at the present.
Saul, OTOH, is a cold-blooded stock seller who would never let this kind of weak sentimentality affect his better judgement like this. I was just wondering if there was a trick to this or if it was just sheer will power?
If I’m not mistaken, Saul rarely if ever uses these phrases concerning companies he owns, and it’s one of two or three key tenants of his success, best I see.
* I’ll hang on to see how this plays out.
* I’ll hold for a few more quarters as the story unfolds.
* Basically, anything that sounds like the company and the stock price are not executing but “the story” is still intact.
Hi FrickNFool. Nice observation. I never put that into words for myself but it is the way I think and invest. I have a limited amount I can invest and I want to put it in my best prospects, not keep it in something that is just hanging around, or even falling apart, in the hope that it would come back. I know that unfortunately some people have hung on to PFIE (now at $1.09), and others have hung on to AIOCF in the hope that earnings growth would start again (maybe it will?), and some even stayed in AEYE (now at 14 cents), long after there seemed to be either bad, BAD, news, or even just news indicating they wouldn’t be going anywhere soon. I always figure I’d rather put my money to work making gains, rather than sit and hope.
Thanks,
Saul
12 Likes
I sold the UA in my account but kept a few shares in my kids’ accounts. UA is an incredible company and they are so well-placed in health and fitness. I was reading on joshuakennon.com about Nike in the early days and how they make so much money on their apparel. I’m glad I kept a little bit of it. I feel like I can have a few high PE stocks around.
Karen
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The one I am sticking with that you’re taking a break from is Facebook. 
By the way, there was a very good interview on the MF Money podcast (Friday) that Tom Gardner had with the marketing director at Zillow. I almost want to get back into Z based on what I heard. Oh goodness, look at their chart though!! They aren’t making money yet…
I had made some money on my Zillow shares when I sold so maybe I should leave it at that and be happy…
Karen
I pretty much follow this board and don’t post since I’m learning so much here. I had 65 stocks about two months ago and now I have 37. Still have some really expensive stocks like NFLX, BIDU, DIS, LNKD, MELI, MIDD, TRIP, SBUX, and Z. Having a hard time getting rid of them but I’m checking performance over the last year and last 3 years. Did get out of UA in favor of SKX and a few other similar moves. Trying to let go of stocks I like ie $130 in SSYS to $40 before I sold. Trying not to do that again ie AMBA. Watching less expensive stocks and have had just as good, if not better, performance with these stocks as the high flyers. Thanks for everyone’s thoughts and ideas on this board. It really has helped me. BTW my portfolio performance is up about 25% YTD and has done well since I’ve sold off some stocks. Happy Fathers Day to all dads!
Fool on,
Htownrich
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Trying to let go of stocks I like ie $130 in SSYS to $40 before I sold. Trying not to do that again ie AMBA.
Hi townrich, I don’t see those as parallel stocks at all. SSYS had lots of hopes of fast growth but it never happened. AMBA is growing revenue at 51% (which is high for revenue) and is growing earnings at 114%. Even with its PE of 49, AMBA has a 1YPEG of only 0.43. I doubt that SSYS ever had a 1YPEG below 1.40 in its high-flying life. Make whatever decision seems right to you, but don’t do it because you are lumping them together.
Just saying…
Saul
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Exactly what I was trying to say but did it poorly, Saul. The high flyers get slaughtered when they are so expensive and anything goes wrong. Many times even if everything is right but whisper numbers etc are not met they take a beating. AMBA and other stocks that have gone up a lot still are not expensive and news should not be as much of an issue plus they have a long runway ahead. I am holding all my AMBA because it is still cheap. I am much more concerned about the NFLXes and Zes etc in my portfolio.
Htownrich
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- I’ll hang on to see how this plays out.
- I’ll hold for a few more quarters as the story unfolds.
I am personally facing this situation holding on to OTEX…anybody else in the same boat that I am in?