This is not the truck you want parked outside you portfolio. Take care of leaking problems before the poison truck’s called in to squirt all over
your Good Stuff.
Stock prices drop, and so do bombs. Who wants to be there at the end either way?
Stock portfolios are structures, built from the ground up. Portfolios are like buildings. If a weakness exists, the environment will find it. Water, wind, and pests, all seek a foothold. For investors the market is the environment. That means that any weak positions in a portfolio will be revealed, typically in unpleasant fashion.
Portfolios require maintenance, and management. While evaluating strategy we look to who? Benjamin Franklin. What did Ben tell us?
London, hometown of the infamous “Hell Fire Club.” Ben loved it in London–so much to do.
What did Ben tells us? “If you’re gonna party in London you better be able to run with the wolves?” No. “Don’t take the subway.” Close.
“Watch the pennies and the dollars will take care of themselves,” Little Richard’s Almanac. Benjamin Franklin.
Ben might have gotten himself lit-up briefly by the whole kite/key thing. Maybe not, but the story didn’t end there. Ben survived his sky-mining operation and then went on to Europe, and the kicky murderous hi-jinx of the infamous “Hell Fire Club” in London. And Ben took up an extremely high post in Paris as U.S. Ambassador to France. Ben lived large on the continent, but quietly–except for that stuff in London. No clarity exists regarding Ben’s precise portfolio holdings, yet anyone successful enough to spend the final decade of their life rolling freely around the Paris Glitterati possesses some insight worth plumbing. To anyone objecting to Ben’s thinking we simply respond, “you’re not on the $100 dollar bill.”
Idyllic days for Ben outside Paris. “Little Richard” had already made his nut as a printer.
The Navy SEALs also fully understand Ben’s point. SEAL sniper training demonstrates the value of tight focus. Trainers inform candidates to “aim small, miss small.”
Good portfolio management means concentrating on your losers first. winners take care of themselves, up to a point, while runaway losers will wreck the ship in no time flat. At StockJaw we always focus first on our weakest positions, before moving on to our best performers. In this manner, we prevent losing positions from becoming disasters, disasters parked right in our hand.
I think you still out county taxes on this. “You want interest with that bill?”
Focus first on your losers. Winners will take care of themselves.” Heard this first from the brilliant Jim Cramer. What a teacher and creator of empowerment.
Set your loss threshold. Stick to it like sick. Beyond what point would not go? For example, Investors’ Business Daily is a widely-respected source of equity information and management. They’ve been around forever. Their talented founder William O’Neil will flatly state that 7% down is it. No further. We listened, long ago.
Here is Our losing position management process. At 3% down we recheck our downside exit options. We check the chart for the next support level, and the one beneath that. We continue to examine the fundamental story in an attempt to clearly gather the market’s attitude, or sentiment. As we indelibly stated in our recent piece “Think Tank. Back From the Bunker Report” investor sentiment in the short run often matters more then what we know.
Savor all Our latest portfolio moves clearly revealed in StockJaw’s
“Think Tank. Back From the Bunker Report”
Examine our complete holdings in detail;
NOW WITH OUR BRAND NEW:
Conference Call Ratings–CCR’s,
We now rate the ease of understanding of a company’s business, and communications with shareholders. It’s a super-simple 1-4 Star rate. 4’s “Great,” 1’s “Poor.” We do this in order to help simplify equity selection. Some calls are great, while others opaque. We won’t deal with that. Neither should you.
StockJaw.com’s “Crooked Hours Report.”
When your your company’s “thesis” or entire plan, is threatened, pressured, or even breaking, you’ll find it here. This turned out to be an even better idea than we thought.
Facts often matter less than sentiment. Investors love Tesla and the Elon Musk Show, despite the fact production #s have never even touched company projections. The Model 3 will be no exception. Elon’s fun, the story’s exuberant and Jewels Vern-fantastic, thus his shareholder base floats on-ward atop cushion of dazzling expectation and faith. Who can blame them? Elon’s amazing and we should be listening.
Where do you pull the plug on losing positions?
We at StockJaw feel O’Niel’s 7% rule to be a good measure of failure. Time is key. Loses build, and brokedn stocks do not fix themselves, at least not over night. We don’t care if the stock immediately jumps back up. If it does we can choose to reenter. Riding it down however leaves you looking up at your cost basis. Not good. Equity elevators all go down, eventually. Many do not go back up and they never display that on the floor selection panel.
No investor has 50 years to wait for a turn, like our senate’s 50 year boycott of Cuba. Unlike Jessie Helms, we recognize the need for fact-led action, rather than blind dismal hope set against the facts. Unlike endless congressional maundering, investors must declare obvious failures as such. Call your losers out, quickly. If not you may be staring up form a deep hole wondering exactly how you go there.
The only one fooled by a failure to cut a losing position, is the one sitting on it.
Thank’s for reading. Keep Looking.
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