An even better approach might be to sell your low conviction stocks on a day when they are all up, and add to high conviction positions when they’re all down.
That my dear boy, is market timing and I don’t do that. I’ve seen too many people waiting, with cash in hand, to add to high conviction positions when they’re all down… and watched while they all went up 30%, 50% or 100%, instead of down. If they are high conviction, by definition you don’t expect them to go down. I don’t sit around with cash waiting for my best companies to go DOWN before I buy them.
I was able to sell part or all of two of my lowest conviction stocks at down 1.0%, and use the funds to add to some of my high conviction stocks at down 6.5% to 10.5%. You don’t get a chance like that every day.
As I’ve said before, if one of my stocks is down 10% and I don’t know why, I worry, but when they are all down, it’s just noise and I try to take advantage of the opportunity.
Seems to me there is an element of market timing to this approach. If you are willing to add to high conviction positions due to an unexplained drop in all your stocks like today, why not be willing to lighten up on low conviction or trial positions during unexplained market surges? “Just noise” can cause all your stocks to go up just as easily as down, can’t it? It simply depends on what kind of noise it is.
I always keep some cash on hand to take advantage of irrational market drops. But that’s just me - I guess I look at my cash as a “low conviction position.”
I agree Saul, it was a wonderful day! I also took advantage of adding to my high conviction stocks. But was fortunate enough to have sold some lower convictions earlier this week so didn’t need to sell anything today. What made the day even more wonderful for me was not seeing the board flooded with doom and gloom posts. There are so many of us that owe so much gratitude to you and others here. I know this board has thoroughly changed and improved my thought and decision making processes. So thank you for the lessons learned so that I can look at a day like today as wonderful, and be able to think thru and act on what sure seems like a nice opportunity.
Seems to me there is an element of market timing to this approach. If you are willing to add to high conviction positions due to an unexplained drop in all your stocks like today, why not be willing to lighten up on low conviction or trial positions during unexplained market surges?
As I tried to explain, I’m willing to take advantage of an opportunity for an unexpected bargain. That has nothing to do with market timing. I wasn’t hoping or expecting today’s opportunity. It just happened. What made it different is that I had two lower conviction stocks that had already fallen a good deal, one of which I had largely sold out of already, and today, when my favorites were down bunches, they hardly fell at all. It was a no-brainer. If those two had fallen as much as the rest, I probably would have done nothing.
On the other hand, I don’t sell things because of an unexpected rise. I simply don’t sell things because they are going up, period, because I expect them to go up or I wouldn’t have purchased them, and because I don’t know how far they are going up.
“I was able to sell part or all of two of my lowest conviction stocks at down 1.0%, and use the funds to add to some of my high conviction stocks at down 6.5% to 10.5%. You don’t get a chance like that every day.”
Nice. Seems like a good time to make the change if you are looking to make the move. Smart.
So curious Saul, which stocks did you sell out of today and which did you add to.
I didn’t add to anything because it feels like a bit more backing and filling needs to take place after this incredible run. But that’s me.
I did buy a first position in BZUN on the sell off though.
“He probably sold one of his smaller positions and added to TWLO and ZS, but does the specifics really matter?
You shouldn’t really just blindly follow what others do anyway — you really need to learn to make your own decisions.”
So when it fits the situation one should be specific with what they do and we should care, but then not care when it doesn’t fit? Why then post each month every trade and move made specifically after the fact but not the day of.
Honestly at times I find this board a bit cultish. You ask the guru a question and if deemed uncomfortable then the handlers come out and answer it for him, always putting the questioner at some degree in their place.
Why don’t you just let Saul answer or not answer the question of what he bought and sold? He shares it monthly, what’s the difference.
I’m pointing this out on my last day of membership. If it wasn’t my last day I wouldn’t bring it up as it’s not worth it. Honestly I think a lot of followers of this board are scared into not asking questions because of past experiences. Not just this board, others as well. Maybe that’s the way board mentality just works. Sometimes though the herd mentality can end up silencing a lot of otherwise very valuable viewpoints.
I’m flabbergasted that you seem to think that Saul has a duty to answer every question. The fact that he gives his time so generously and literally has changed the lives of so many here is credit enough for all he does.
Hi, guys,
we should all appreciate Saul and this free board. He does not need to share to any of us. And I made far more $ than any other paid subscription by following his lead. If any of us don’t like certain things, it is free to leave as well. But to blame Saul on the way he manages the board or responds to some questions, that is way beyond the limit in my opinion.
What I got out of Saul’s post is confidence in the process. So, if stocks go down it’s a good chance to buy into that process. Which stocks you buy are up to you. Really, it’s the process I’m learning here; not to freak out, hold the tiller through the storm.
"all these “high conviction” stocks were cheaper a month ago (some of them even last week) and yet today they are considered “on-sale”?
that seems odd to me"
This is a very insightful post from carver and caused me to reflect, as I also topped up several of my positions.
I can say in my case I have been selling SA picks that are long in the tooth and not likely to double or triple from the current price, and buying “Saul stocks” (some of which are also SA picks) that have more room for growth.
However, regardless of confidence level I am loathe to jump in with both feet and make a massive switch; I would rather stagger changes in my portfolio.
So I agree that yesterday was not really a bargain; I was just more ready to buy.
