Nice one Tracy
Thanks for your reviews and input into pooling our collective wisdom.
Question for the fine folks on this board. I manage to do a reasonably good job at identifying growth companies, and I will make the first investment. But I don’t do well in making subsequent investments. How do you manage to make the follow up buy? Do you follow the stock price, and any news/quarterly reports? What works for you?
That’s an interesting question. Usually I worry about what to invest in/when and what to exit and when but what to add to, when and how is not something I have a mechanised approach to.
What I would say and this is partly a shift in investing style and partly a learning from hard lessons is that in olden times I would be more in value investing mode so typically I might see something of perceived value and add on drops in the share price. Now with a growth investing agenda I might identify and make a first purchase and add not on drops but as the share price breaks out or achieves an upward trajectory.
I might make additions to growth stocks if the share price drops but usually if that is also accompanied with a de-risking insight - for instance I love investing when an earnings report demonstrates business performance, removes uncertainty and risk yet the share price drops back.
2 examples of this working for me have been Ali Baba and Micron.
I entered when they were bombed out and looking like good growth prospects, I added when fundamentals and earnings accelerated yet when there was a pull back in the SP but I also added when the share price broke out from old highs or from under key resistance levels.
In terms of amounts I might start with a 0.5-1% investment and add 0.5-1% at a time (usually a function of cash availability constraints unless an opportunity also times with an exit opportunity).
With that said, I am not advocating this as the right approach or even as a conscious strategy but merely sharing what I have had a tendency to do.
Cheers
Ant