The importance of integrity in money management
This last week we had a situation where I didn't know what to do: one of our stocks just hit our Stop price but my trade was not executed. Someone else's was. I brought it to you and asked - what should we do? The impact is ~$330 overall.
We are keeping it in the portfolio.
Every week I present my research, my ideas, and the weekly results of the stock picks in our model portfolio (and others). To me, the only credible way to discuss performance is to say "if you invested $1, how much would you have today?"
Compare this to the shady Motley Fool presentation. In one of their recent newsletters they promote just how great their stock picking is (http://www.fool.com/news/commentary/2006/commentary06102015.htm?source=eptyholnk303100&logvisit=y&npu=y). They cite ISRG as an example - a market killer! And on a YoY basis, it is up 50%! Except that on a 9 month basis it is down 25%. In fact, it has been flatlining since February, when they started missing earnings.
Or consider another of their frequently touted picks: MIDD. MIDD raced up until early this year, when they fell to earth - dropping 50%. They are up ~30% for the last 12 months, thanks to a major surge the lsat few weeks, otherwise we would be looking at 0% growth YoY.
Motley Fool deserves a hell of a lot of credit for locating their gems. If I followed their approach I could say that I found AKAM in December and it has risen 250% since I found it. But I don't because that approach is bullshit. Your portfolio is a moving target and should be: the buy-and-hold mantra is only good for 2 years at best for the majority for stocks, sometimes even less. Holding stocks can be even more volatile if you want to squeeze out every dollar through active trading to move in and out of the same stocks.
The only valid way to assess performance is to gauge how well the stocks in your portfolio have been performing for the same period of time. Motley Fool gives no sense of when to sell (or else folks would have ditched ISRG when it was much higher.)
Investing is a combination of stock picking and money management. I have had good and bad calls (not getting back into AKAM is my worst call to date). But I am honest about what I do. Mistakes and all, I am happy with where we are and where I hope we will be.
We are keeping it in the portfolio.
Every week I present my research, my ideas, and the weekly results of the stock picks in our model portfolio (and others). To me, the only credible way to discuss performance is to say "if you invested $1, how much would you have today?"
Compare this to the shady Motley Fool presentation. In one of their recent newsletters they promote just how great their stock picking is (http://www.fool.com/news/commentary/2006/commentary06102015.htm?source=eptyholnk303100&logvisit=y&npu=y). They cite ISRG as an example - a market killer! And on a YoY basis, it is up 50%! Except that on a 9 month basis it is down 25%. In fact, it has been flatlining since February, when they started missing earnings.
Or consider another of their frequently touted picks: MIDD. MIDD raced up until early this year, when they fell to earth - dropping 50%. They are up ~30% for the last 12 months, thanks to a major surge the lsat few weeks, otherwise we would be looking at 0% growth YoY.
Motley Fool deserves a hell of a lot of credit for locating their gems. If I followed their approach I could say that I found AKAM in December and it has risen 250% since I found it. But I don't because that approach is bullshit. Your portfolio is a moving target and should be: the buy-and-hold mantra is only good for 2 years at best for the majority for stocks, sometimes even less. Holding stocks can be even more volatile if you want to squeeze out every dollar through active trading to move in and out of the same stocks.
The only valid way to assess performance is to gauge how well the stocks in your portfolio have been performing for the same period of time. Motley Fool gives no sense of when to sell (or else folks would have ditched ISRG when it was much higher.)
Investing is a combination of stock picking and money management. I have had good and bad calls (not getting back into AKAM is my worst call to date). But I am honest about what I do. Mistakes and all, I am happy with where we are and where I hope we will be.
posted by Andrew at
12:24 PM
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