Would you be interested in/willing to do an article (maybe recurring on a yearly basis) of your conviction rankings? I think it would be interesting to hear why you rank a position higher or lower on that list, and see the changes over time as thesis/markets evolve. Thanks for the article.
This is a great topic and your points are all well-taken. I’ve been investing in individual stocks since I was an eighth grader (44 years ago) and it’s interesting how one’s age/time of life affects investing behavior. One of the best things about investing is that it is one of the few activities one can really get better at after 50.
One of the toughest challenges (for me) remains knowing when to sell a long-running winner. That’s why I appreciate your continuing coverage of the stocks you own, some of which overlap with long-time holdings of mine. Objectively re-evaluating the case for continuing to hold a position that’s gone up a lot after ten or fifteen years-old is very difficult.
This is a great comment and agree on all of your points, emotional attachment is real, especially with long-term winners! I will hopefully have a 44 year investing story like you have had to date, impressive!
Points 3, 4, 5 are very relevant and I can totally relate to it. In an age, where everyone wants to talk only about their multi baggers, your article on your investing mistakes (and key learnings fom it) is a fresh breath of air
Thanks for the post. I agree with some and disagree with some of these. For Mistake 4, sell losers or double down, this has some "activity bias" in my view. Maybe you invested in X but got your valuation wrong. It drops say 1/3rd, but now your more / equally confident in your updated view of its future range of outcomes. If you would invest the same % today in the current valuation & price, you should just keep the investment. A previous error was made, but importantly, that in the past. The current situation is what it is, so there isn't always a need to take action.
For your Opportunity Cost mistake, the example given is over 2 years, which isn't much time for a long-term investor. Peter Lynch said that some of his good investments came after buying a position and it going sideways for 4 years and then doubled in the 5th. Even better, of your conviction grows over those 4 years of sideways or down price, it can lead to a great opportunity to add more.
In your example, unless your Nintendo conviction (company and valuation) was higher than Danaher throughout the period, not just because Nintendo's stock price had gone up, then adding to Danaher could well be the correct move long term. Ie if both had the same conviction and valuation range at the start, then if Nintendo price went up, unless your range of outcomes also went up, it's valuation got worse relatively
Thank you for the reply, on the first point, for sure there are exceptions but it the valuation is more acceptable now maybe it's better to sell it and reconsider it rather than make that judgement while risking being emotionally attached.
On opportunity cost I would agree if you hold a position that can double in one year, not really the case for Danaher for example
Thanks. On the opportunity cost, I think any company can double in a year, if the sentiment changes from negative to positive. If a company is growing well but the stock price has remained flat or down for some negative sentiment reasons, this can quickly be reversed in its price, even with seemingly stable companies in my opinion.
For the first point, yes, a key part is removing emotional attachment to the previous decision and loss. If you can do that however, I think it can be worth to keep a position and not add, even if the price has dropped, if you're new valuation of it has dropped in tandem (obviously has the risk of your valuation being too high again). If your conviction has also dropped, then best to sell out of course
Would you be interested in/willing to do an article (maybe recurring on a yearly basis) of your conviction rankings? I think it would be interesting to hear why you rank a position higher or lower on that list, and see the changes over time as thesis/markets evolve. Thanks for the article.
It's a good point and definitely something I can mentioned in the annual recap!
This is a great topic and your points are all well-taken. I’ve been investing in individual stocks since I was an eighth grader (44 years ago) and it’s interesting how one’s age/time of life affects investing behavior. One of the best things about investing is that it is one of the few activities one can really get better at after 50.
One of the toughest challenges (for me) remains knowing when to sell a long-running winner. That’s why I appreciate your continuing coverage of the stocks you own, some of which overlap with long-time holdings of mine. Objectively re-evaluating the case for continuing to hold a position that’s gone up a lot after ten or fifteen years-old is very difficult.
This is a great comment and agree on all of your points, emotional attachment is real, especially with long-term winners! I will hopefully have a 44 year investing story like you have had to date, impressive!
Thank you very much, buddy!
More than welcome!
good stuff here, thanks.
Thank you for reading and for the comment!
Points 3, 4, 5 are very relevant and I can totally relate to it. In an age, where everyone wants to talk only about their multi baggers, your article on your investing mistakes (and key learnings fom it) is a fresh breath of air
Thank you very much!
Super article, we learn so much more from our losers than our winners
Thank you very much Wolf!
Wuenderbar! Thanks for sharing, Leandro
Thank you Andy!
Thanks for the post. I agree with some and disagree with some of these. For Mistake 4, sell losers or double down, this has some "activity bias" in my view. Maybe you invested in X but got your valuation wrong. It drops say 1/3rd, but now your more / equally confident in your updated view of its future range of outcomes. If you would invest the same % today in the current valuation & price, you should just keep the investment. A previous error was made, but importantly, that in the past. The current situation is what it is, so there isn't always a need to take action.
For your Opportunity Cost mistake, the example given is over 2 years, which isn't much time for a long-term investor. Peter Lynch said that some of his good investments came after buying a position and it going sideways for 4 years and then doubled in the 5th. Even better, of your conviction grows over those 4 years of sideways or down price, it can lead to a great opportunity to add more.
In your example, unless your Nintendo conviction (company and valuation) was higher than Danaher throughout the period, not just because Nintendo's stock price had gone up, then adding to Danaher could well be the correct move long term. Ie if both had the same conviction and valuation range at the start, then if Nintendo price went up, unless your range of outcomes also went up, it's valuation got worse relatively
Thank you for the reply, on the first point, for sure there are exceptions but it the valuation is more acceptable now maybe it's better to sell it and reconsider it rather than make that judgement while risking being emotionally attached.
On opportunity cost I would agree if you hold a position that can double in one year, not really the case for Danaher for example
Thanks. On the opportunity cost, I think any company can double in a year, if the sentiment changes from negative to positive. If a company is growing well but the stock price has remained flat or down for some negative sentiment reasons, this can quickly be reversed in its price, even with seemingly stable companies in my opinion.
For the first point, yes, a key part is removing emotional attachment to the previous decision and loss. If you can do that however, I think it can be worth to keep a position and not add, even if the price has dropped, if you're new valuation of it has dropped in tandem (obviously has the risk of your valuation being too high again). If your conviction has also dropped, then best to sell out of course
Good list. Mistakes are unavoidable, but learning from them, and ideally learning from OTHER PEOPLE's mistakes is crucial 💚 🥃
Completely agree, don't tell me what you got right, tell me what you got wrong!