Thought processes

I like this board because…

  • It makes me think. Probably more so than any other board I have seen.
  • It provides me with new ideas. Some have been good, others not so much so far.
  • Saul does an excellent job of contributing and moderating it.

I don’t post a lot but I do soak it all in. I will probably always feel like I’m still learning rather than having wisdom to share. Rather than analyzing my holdings I stopped to analyze the thought processes involved for me and decided to think through those a little.

I don’t adhere to Saul’s methodology for investing. I don’t do the deep dives into financials and I hold more than 20 stocks. However, I have been trying to incorporate some of that thinking into my decisions because it has merit. As a few recent posts have illustrated there are other people here that follow different plans. iVish has 120 stocks and seems to be quite comfortable with that. Anirban had 53 and had a number of people say that was too many. Yes, it’s probably too many IF you want to adhere to Saul’s teachings. And I think sweetadeline was maybe going all in on one, which also prompted a few comments. In my case I have even more than that 53 and would have to say that I have a mix of philosophies in progress. I’m not trying to say to anyone that is a good practice. It’s just what I have now. I can’t say that I want to do what Saul does, even though I’d certainly take his results. I don’t think digging into financials would be enjoyable for me, nor would drawing out graphs manually on paper. I respect them as sound practices, but just not what I want to do. I would say that I’ve moved toward more Saul-like thinking and that has improved my thought processes.

I currently have 67 holdings. Recent posts have made me think again about whether that’s too many or not and ask myself why I have “so many”. I think there are multiple reasons. The basic answer is probably that I have, over time, tried several different strategies, but never gone all-in on any of them. Nine of my current holdings are based on a couple of non-TMF services I’ve been evaluating over the past few months. The philosophy there is different in that it’s buy-under, hold for a target price and sell, usually in less than a year. One is value based, the other is growth focused. A few more are REITs and BDCs because they are a little different than other stocks and pay dividends. A lot of people swear by dividend payers so I thought it prudent to give it a try. The ones I still own have done pretty well, one or two turned pretty sour and a couple of others I let go at I what I felt was near the top of a price range. Another factor is buying a “basket” instead of trying to pick the best. I did this in 3D printing stocks. They all worked for a while, too bad I didn’t sell all of them at the top. The story is still there so I still hang on to them. One thing that has come into focus due to this board is that I realize I tend to go for “story stocks” more than I should. That coupled with finding buying more easy than selling probably also contributes to the number I have. I tend to give the story stocks time to play out…sometimes too long and probably a few times not quite long enough. They always seem to take longer than expected.

Yet another factor I think may come into play for me is absolute dollar amounts. If I had only 20 stocks my average would holding be 5%. As it is I have only one over 5%. That 5% number seems small enough, but when I look at the dollar amount I tend to think it’s quite a few dollars (to me, to others it might be insignificant). However, at some point I feel like it’s almost too many dollars in one stock.

A few months back I did take my holdings and create a new, virtual portfolio where I sold off around half of them and concentrated the amounts more into what I felt were the best ones at the time. For a while it did outperform my real portfolio and is still ahead some. However, year to date the real one is ahead.

I think it’s great that some people have found a methodology that works for them. I’m still exploring different options and may always be doing just that. So, my thanks to Saul and everyone else who posts their thoughts here.