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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Len who wrote (10332)11/14/1999 12:04:00 PM
From: Mike Buckley  Read Replies (1) of 54805
 
Len,

I have never before questioned your input...

That's a mistake I hope you'll often correct.

I have to go on record arguing agaist reducing exposure after a stock runs up.

It's all relative. My method is to reduce the exposure after it has run up and then run down. Doing so allows for the possibility that my understanding of the company might be flawed as has happened in the past. And as Malcolm so eloquently put it, it's a matter of protecting decades of savings.

By moving to protect from losses through diversification you are more likely to reduce your gains in the long run.

Probably true. The operative word is "probably." If a mistake is made assessing a particular company, diversifying will actually increase the returns.

You asked if you are getting overconfident. I can only caution that to believe we aren't capable of making huge mistakes about assessing Qualcomm's future is in my mind a symptom of overconfidence.

Back to the issue of improving returns over the long term. In my mind, diversification can be a method of addressing the short term while not unduly harming the prospects for the long term. Using my personal situation as an example, protecting my assets through diversification could possibly make the difference between tossing the day job in months or suffering through a mistake not yet recognized and having to wait years.

All of us have different situations. I don't think there is an investing rule that applies to all situations. My rules apply only to me.

Make sense?

--Mike Buckley
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