"...However, I have a thought about looking back and saying, "Had I paid attention to the valuation, I would have sold near the top before the prices plummeted so far." I think that's probably faulty thinking for almost everyone, certainly for me. Had we paid more attention to valuation we would have sold those positions long before the stock prices got so high. The profits we would have protected would have been much smaller."
I respectfully disagree, as I'm not talking about valuation, I never mentioned valuation, neither the concept or the word; that's not my bag, it's yours. You're a valuation guy, meaning you say, "hmm, this stock is too cheap, the market hasn't valued it properly, and I'm going to buy it before the market realizes that and values it properly". Which is fine; I have some value (cheap) stocks myself. But my accounting skills are poor, and all too often when I think something is cheap, the market knows better, and before you know it, it becomes even cheaper (oftentimes called a value trap) and then aha! the reason becomes apparent... way too late for the poor investor. On the other hand, who am I, to tell the market that a stock is too expensive?
My idea was to expand the number of stocks worthy of consideration, beyond tech and gorillas; look at NTES, for example; it went from $2.65 to $72. Are you telling me that I wasn't even supposed to look at it because the PE has always been high, even at $2.65?
No, what I meant is that I sell the stock when it's some small percent below where I paid for it. I do not average down (though I often average up). I sell come hell or high water. I hope I'll keep the discipline not to question the market. Often enough the stock recovers once my offensive weight is removed from its back (sigh). That's OK; there's always another name, and if there isn't, I stay in cash, which is fine-- there's worse places to be than in cash, like the poor house.
Remember: if you lose your money, you're out, no matter what your philosophy or take, or the lessons you think you've learned. |
