Shamsaee,
How many stocks have you owned in your investment career ...
I have no idea other than to think that it's been too many because of the impact of my earlier days when I was very unsure of my strategies, and as it turns out, rightfully so.
Like most investment careers, mine has been an evolving one and continues to be so, though the rate of change is slowing after having gone through a steep learning curve lasting many years. As I gradually learned how to research companies, value stocks and get a better handle on the time required to adopt an industry's products, I've gotten better over the years at increasing the potential reward while lowering the risk. In most cases that means buying and selling fewer and fewer stocks. (At least that's my perception. Since it's my money that's on the line it's a pretty important perception. :)
how long would you say is/was the average hold on each individual stock
I don't know the answer to that either. Because of having owned too many stocks for too short a period of time as I went through the steep learning curve, maybe it will be more useful for you to know how long I've owned the stocks currently residing in my portfolio:
Cisco -- 3 years
Citrix -- 3 years
EMC -- 1 year
Gemstar -- 1 1/2 years
Qualcomm -- 1 year
Siebel -- 2 years
Also relevant to your question is that I have never sold any of those shares though I do use them to fund charitable giving and gifting to children's portfolios. You'll notice that I happily weathered the downfall ending in Fall 1998 with my Cisco, Citrix and Siebel shares. As I continued to save money I made subsequent purchases of some of the above stocks but don't remember which other than my very recent addition of Gemstar shares.
You said you don't put too much faith in 5 year projections and prefer 2 year projections.Does that mean your valuations and buy and sell decisions are based on companies fundamentals for the next 2 years.
No, not at all. I look at the fundamentals years and years down the road. Using Qualcomm as an example, had I looked only at the next two years when I bought in April 1999 I doubt that I would have been able to find sufficient reason at the time to buy the stock. It's the fundamentals at least a decade into the future that gave it the realistic potential to become a ten-bagger, despite that we now know it became a ten-bagger in less than a year.
When I mention that I don't trust five-year projections and only use 2-year estimates, that's in the context of running quantitative valuations. Using Qualcomm as an example again, during the first weekend of April Qualcomm's trailing PE was only 10% higher than the estimated growth over the next couple of years. That made it an unusual find. I was very, very lucky (not skilled) to come upon a huge market inefficiency that didn't properly appreciate the value of a company's consumer-based product (meaning a product with a HUGE market potential) already 9 months after the tornado had begun and a couple of weeks after the company had become a full-fledged gorilla. Finding such a comparably low valuation in this hot stock market that tends to use price-to-vision thinking instead of price-to-earnings thinking was a moment of extremely good fortune.
If this doesn't answer your questions, get back to me.
--Mike Buckley
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