Considering the individual stocks are only a portion of your portfolio and that you still have money coming in I don’t see a big problem with letting your winners run. My biggest regrets are selling AAPL, ISRG, and HANS (now MNST) too early (actually just selling off to “rebalance” into other ultimate worse investments).
You will hopefully reduce the SQ weighting by adding funds to your account.
If you feel like you know SQ well enough and can tolerate the risk of losing 15% of your portfolio or more overnight then by all means keep your SQ as a high weighting. Remember that many on the board are near or in retirement and have a much lower risk tolerance.
Does it make sense to value rank these on basically what comes down to short term future potential share gains of -1yr ?
Not in my opinion. I only sell when I see something better and feel very confident about it. I have 30 stocks and have indeed recently sold some positions to buy new ones but still ended up with 30 stocks. Oh well. And by the way, my NFLX has outperformed most of the cloud stocks for the year. Up almost 100% for the year. It’s the oldest holding in my portfolio and I’ve never sold. It’s been hard to beat.
Also, just a note on MSFT. If you watched E3, you would have noted they did some pretty interesting things, like buying a bunch of gaming studios. I’d hold on to that one.
Why is it a good reason to trim an overweight position? Most of us are probably more tolerant of volatility and risk, especially the younger crowd like myself.
Too many times since I’ve been investing (since 2005 or so), a strong company has hit unforeseen circumstances and lost a good portion (or all!) of its value. First Marblehead (FMD) was the worst one I have encountered. They securitized private student loans, and, for a while, it looked liked they had a license to print money. It was so easy…I just kept buying more shares and doubling my money. Then, all of a sudden, my shares were were a fraction of what they were the day before. AFAIK, it never recovered.
I’m no longer willing to risk too much of the total on a single company. I’m not aware of anything that commands that sort of conviction.
I think the you want to look at this in a diff way SQ is still a concept in the making and sonly 1 in a 100’s of companies turns out to be AMZN. I used to be invested heavily into INFN as I thought it was a disruptor but sold it off after 7 years at a loss . I am not saying SQ may not eventually be a AMZN but you need to weigh the odds and graudally increase as the concept starts delivering. IF you had 30% in an ISRG which has proven the concept and has great recurring revenues you would be okay but SQ is in a space that is churning fast and putting 30% on a company which at the moment does not have a strong moat beacuse there is too many players trying to get in there unlike when AMZN started in 199 it is like buying a lottery
A chime-in from someone who is truly a long term investor. At your age, with your mindset of long term holding, and if you have many good work years ahead and plan to add money to your account for years, I would not sell a share of SQ… that is, if you see a bright future for the company, accepting there will be bumps in the road, as was with AMZN. I’ve owned AMZN since '97 and now at my $2 cost basis, it’s gained 85,000% and changed my life. (I’ve trimmed some in the last decade and a half.)
I do think the next wave of technology is upon us and there are some excellent companies that will be great investments. Some of them are likely discussed here. Holding some of them, regardless of % of portfolio, will give returns that are hard to imagine today.
As far as over-investing in a 401(K), there’s also the option of putting some of your retirement money into a Roth. I am so glad I moved some regular IRA money into a Roth during lower-income years, and it’s now somewhat less than half the size of my regular IRA.