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I want to once again reiterate the importance of, it isn’t what you own that has as much importance as to how you manage it. No matter what you decide to invest in, the better managed that position is, the better the return.
If everyone of us were given one investment to own, and we couldn’t own anything else, the return on that one investment would vary widely based on how the position was managed.
Since nobody here buys something at one price and never adds to it again over a 40 year time frame, then each of us are managing a position.
Many people buy something, get lazy, the investment doesn’t work out as expected in a short time frame, and they are moving on to another investment.
Don’t buy something because you think it might do good, buy something that you can commit yourself to over a long time frame, and be willing to manage those positions.
Who do you add to and when? Who do you trim? Who do you ignore for now? Who are you willing to hold through good times and bad? … Those are the things you need to manage in order to run a successful portfolio. Chasing rarely works, and when it does, it is fleeing. It won’t last. At some point you need to know when to circle the wagons and defend your positions. The more you wander off the reservation, the more you open yourself for even more mistakes.
I have shown a number of ways in how I manage a portfolio, in in doing so, some of those decisions may not have worked out as well as some folks would like, but what is important to remember is that my decisions may not always create great results, but they don’t create great failures either, and that’s the key to running a successful portfolio. If it can’t help me, don’t hurt me.
The way to accomplish this is through proper weightings and when you bring those weightings up in size. You do this my learning how to average up and not through averaging down. If your biggest losers are from full positions, you screwed up. I make an attempt to keep our biggest losers underweight and will only add to them when they start to outperform. I will average up or not add to them at all.
Good money goes after good, good money does not go after bad. When you learn how to apply that concept, you’ll have greater peace of mind.