OnTheBalance wrote: Saw Ib1temporary's post, so just wanted to note some ideas.
Agreed, there are many types of investors, with different goals and approaches. But in order to win the losers game, as referred to in Charles D. Ellis' brief masterpiece Investment Policy: How to Win the Loser's Game, an investor needs to think and assess their own particular situations, risk tolerances, lifetime cash flows etc, and write out their own Investment Policy. Their own 'guiding light'. Whether they engage wealth managers, or do it on their own, the written out policy is the key.
In my own case, I began investing while attending University, three decades ago. After the first five years of a lot of excitement, and trades, but sub par results, a mentor handed me a copy of this slim green book. Over several months, I wrote out my investing policy, which has since served me well. It has allowed me to stay the course, and build up a portfolio of some excellent businesses, through the ups and downs of the market, for 25+ years. Without a written policy, one is blown around by events, and the weather, instead of focusing on the climate surrounding the businesses one decides to invest in.
if one elects to invest in longer term holds, it is not about being a white knight as ib1 states, or some idea of loyalty, but very much a pragmatic approach that utilizes periods of softness to grow specific holdings. But by knowing these businesses inside out, one has the confidence to act in scale, on special occasions. In the case of AC, March 18 last year presented such an occasion. Also it does not mean that one never divests any of these holdings. However the bar to divest is set so high, that one rarely does so. In my case, I only sell shares of holdings in my long term portfolio if I have other businesses to invest in that have assuredly lower risk, and I see a genuine potential to gain at least 50% more over next 5 to 10 years. In 2020, I divested 80% of my oldest holding, and re-invested the funds into two new holdings, plus into three existing holdings, including AC. Over a lifetime, this approach minimizes the repeated drain of paying capital gains taxes at high marginal rates, when one's career income is at peak. This approach does not preclude one from having another portfolio that is built around speculative investments. Call it the fun portfolio. But it's about managing the position sizes, so one is not over invested in that portfolio, and one can accept the volatility in these speculative positions. My initial foray into AC in 2012 was speculative, and I was ok with the idea of losing all of the capital of the initial investment. By 2016, I understood management's plans and trusted them, so moved my holdings into my long term portfolio.
So, what am I getting at? If one is a professional trader, one trades usually with their employer's capital (clients' monies), so that is daily work. But if one has a career that one enjoys, why not create long term wealth? Way more that one would ever need. And at the same time, while enjoying one's main career. So, instead of frenetic trading, build one's own wealth fund, step by step. Since, many new and younger investors have entered the game recently, I am sharing this approach as an alternate to the hectic approach of constant trading. If investors have specific cash needs at specific times, they can still adapt this approach to their needs. Similarly when special opportunities like 'Wuhan" show up, one can continue to find ways to Act in Scale, to give a larger boost.
Find your own style of investing that suits you, match it to your risk tolerances, and write out your Investment Policy. I am only sharing what another person shared with me about 25 years ago.
GLTA.