Friday POW!
Pick of the Week!
"Don't try to buy at the bottom and sell at the top. It can't be done except by liars… I’ll give you the bottom 10% and the top 10% of any move if I get to keep the middle 80%.” -Wall Street legend Bernard Baruch, who was, arguably, the Warren Buffett of the first half of the 20th Century (what is inarguable is that Mr. Baruch bailed out Winston Churchill after the 1929 stock market crash)
The Hard Art of Taking Profits
In this week’s POW! edition, we are introducing a revised format to make it easier for our paying subscribers to read about our most actionable ideas. Even more importantly, it will allow us the space to provide updates on existing positions. In other words, there will be more balance between buy, hold, trim, and sell guidance. To facilitate that, individual name write-ups will be more concise.
As you’ve seen from our various return summary documents, we’ve put out an abundance of bullish guidance over the last two years, in particular. Prior to the start of 2024, those were much less frequent but we plan to disclose the returns for those years, as well. In fact, a prominent security from that earlier era, which received a follow-up plug in February 2024 at an opportune time, is on deck today. We’ll come back to that one shortly.
Because subscribers who have been with us for the last couple of years, and have followed at least some of our accumulation suggestions, should now hold a number of positions that are, more or less, our responsibility. (We’d say less, but many of you might say more… especially, when they go south instead of north!)
Frankly, we believe there’s much too much emphasis on buying and not nearly enough on either loss-minimization (i.e., cutting out losers before they become malignant to your portfolio) or gain-realization. Even the best investors frequently admit selling is harder than buying.
We carry no illusions of clairvoyance when it comes to the path of future stock prices. That’s why we’re fans of easing into positions when we’re proposing portfolio additions. It’s also the concession behind our advocacy of a gradual, or dollar-cost-averaging, disposition process when it comes to winners. As you all should know, we’ve been blessed with a plethora of those but they do create their own challenges. One of the worst experiences an investor can have is to watch a stock erupt in price and then ultimately give back all of that gain… or even flip into the loss column.
It’s also not a great feeling to fully book a hefty gain and then watch the issue in question double, triple, or more, after a complete exit. You no doubt have noticed that in almost all cases we incrementally book profits, like 25% at a time. The above-referenced stock will provide an instructive example in that regard, as paying subscribers will soon read.
In keeping with the abridged nature of this POW!, let’s get to some specific examples…
