RE:RE:RE:RE:RE:RE:PAT sp dropInteresting discussion and perspectives.
I've been handling my investments for about 18 month now. Before that I was with a full service brokerage and spent a lot of time second guessing my advisor's choices. Some things he put me in went up, some things went down, some things he suggested and I vetoed went up and other down, some things I suggested and he vetoed the same. In the end I left because I didn't like the full service brokerage fees I was paying per trade. Would cut my return by several % each year.
SInce I started doing this I've had mixed results. 2016 I was up 23.9%. This year, YTD I'm up 2.2%, and that's with a large amount of trading, averaging down, etc. But if you remove the 4 worst buy choices I've made (and I usually hold about 25-30 positions) in 2017 and simply kept that money in cash I'd be up at least 10% YTD. 3 of those choices (SPE, CJ & DR) I've already sold at a loss and moved on from. Had I held all three I'd be down another 5-7%.
I have never had a 10 bagger in my life, both before and since I've been doing this on my own. Ive ground out a lot of 10-25% gains in stocks by holding and collecting dividends.
My takeaway is this: When looking for 10 baggers you will more often lose money than gain. I emotionally stew more about losers than I crow about winners so I decided to limit the number of "10 bagger" type stocks. PAT-V is one of the few I own that one could consider a potential 10-bagger.
My basic investing rules of thumb are:
1) Put no more than 7% of your portfolio into any one holding
2) Try to diversify across a broad spectrum of investments. Look at Eric Nuttal's energy fund. Down almost 50% YTD. And he's a "Pro". I try to have as many non-correlated assets as possible.
3) If you break rule #1 make damn sure you understand your company and have a direct line of communucation to the CEO/CFO if you have any questions. I am heavily overweight in a company called Greenspace Brands, JTR-V. The CEO answers my email quickly, I know a fellow on the BOD and I understand that company inside and out. It's a risk but a calculated one to be overweight.
4) Try to have at least 50% of your portfolio in dvidend paying stocks. I'm probably at about 60% right now.
5) Keep 5% minimum in cash. Right now I'm at 8%
6) Sell a portion of your investment, usually 25%, once you are up 25%. Riding a stock up without taking some profits only to see it fall right back again can be emotionally damaging.
7) THIS IS THE HARDEST ONE: Take a loss sometimes. Move on from investments that no longer make sense to you or emotionally keep you up at night. Use that loss to your tax advantage if you can.
Gotta go play with the kid in the park. Best to all.
El Joro