I will give you the secrets to overcoming problems with "holding on to something long enough to make a really big score on it"
(Just wanted to jazz up my headline sentence a little here on a quiet Sunday afternoon.)
Okay, a "big score". We've talked about it before, and from what I gather (with public and private responses), we almost all say that we have trouble getting and holding one (or more) of these. The ten-bagger discussion. About which there are at least two aspects:
1. Can you find them and hold on to them for the 10x rise?
2. Did you put enough money into such an investment to make a lot of money ('big score') at the end?
One of only a couple examples I remember on this thread is the person who made 30x or 50x or more in a couple of years on his very concentrated 'portfolio' of two investments in Chinese internet stocks, back in the day. I believe he said he sold most of his holdings near the top for $500k.
My whole investing theme for the past decades has been to discover what works in investing for the average guy. So, for me, I say, if so many people (esp. value investors) have such difficulty in achieving the 'big score', then I say let's forget about it. Let's reframe this into something that's doable, workable, and has better success possibilities.
Instead of seeking the 'big score', let's look to make good money. What seems to happen is that some stocks we like go higher longer than what we deem reasonable (or than we have confidence to hold on). As stock continues higher, confidence declines (sometimes), and anxiety increases. So to overcome this, one takes profits on scale up. When one perceives the peak - either in the stock price or the anxiety level - and one sells out --- KEEP a small amount--- a STUB. The benefits are these:
1. If the stock continues to rise, not only is a little more money made, but the psychological benefits are positive... one is still a participant.
2. If the stock declines, it's just a small offset to the gains that were previously taken on that position. Should the stock drop seriously enough, you can sell the stub: a small loss that confirms your good judgment and good fortune that the stock was mostly sold at the peak.
3. If enough stubs of different stocks are held, the $ gains -- and there will be gains -- will add to the portfolio's value.
3a. The dollar gains from stubs are surreptitious. The amounts are cumulative but small enough individually (by stub) and daily/weekly (by $ change), that they are not in-your-face noticeable.
This means that over time, one pays less attention to stub holdings and that the companies can go about their businesses and the stock can rise without the stub holder investor having to focus on the company's stock price every day. You go from anxious money working for you, to patient money working for you.
I was going to list some examples I hold; I don't know where to begin - I have at least 40. Some old stubs I still have would be EK (accumulated from 1930's mostly sold 1960's and most recent sale in 2004), IBM (from 1995, last sales in 2005), SUNW (from 1995 last sales maybe 2000), AAPL (okay, I won't mention it -g-), RJR (2002 purchase, sales in 2003), MO, JST, KNDL,PCYC, VVTV, JST, LH, CAH, etc. etc. |
