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Strategies & Market Trends : Value Investing
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To: Graham Osborn who wrote (56525)1/1/2016 10:37:43 PM
From: Paul Senior  Read Replies (1) of 78774
 
...any position I buy should have a decent shot at a triple


That rule could work. All you need is a few good winners and you can retire. (So it seems)

You face a number of hurdles:

If you have only a small $ portfolio, you would be limited in the number of possible triples you could invest in with a decent size position.

You may have to wait several years to see a triple. (Assuming you hold that long and don't sell even as you have waited for the double stage.) About 3% of the stocks in my general portfolio show a gain of 250% or more. The fastest I've reached that gain is about 3 years. Maybe though I've reached it faster with some stocks and have sold 'em out, so there's the survivorship issue.

Perhaps you are saying, regardless of the dd you do, you lose more on the downside than you want or expect, so you will only from now on invest in your best ideas (those with a decent chance for a triple, --even if held only for a smaller gain than that).

You may have read here though that I'm not the only guy to post that his best idea stocks almost never turn out to be the best performing stocks.

Maybe, instead of seeking "a large upside to compensate for all the times (you) screw up on the downside", you might consider altering your research methodolgy/dd. If you keep it as is, you might very well make the same judgment errors in betting on a stock that you believe passes your three rule section.

jmo
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