Evolving the Way I Invest
The CommonStock community is an amazing resource. This is a place where you can reach out to really smart people and have in-depth conversations about what drives your investing decisions.

Case in point, I had a conversation with @stocknovice that convinced me to evolve the way I invest.

Up until now, I have seem my competitive advantage in investing as having a longer time-horizon than everyone else. When I buy, I tell myself I’ll hold forever. Over time, as I’ve added new positions to my portfolio and (almost) never sold, it has ballooned to 92 different companies.

For my first seven years of investing, this strategy worked great because as a beginner I learned a lot about different industries and companies. My skin in the game kept me motivated to keep tabs on a wide variety of business situations. But now that the portfolio is so large, it’s impossible to keep up with every position.

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The top 15 companies have grown to be 30% of the portfolio, while the bottom 15 companies are so small that even if they 6x’ed tomorrow, I would hardly notice.

A good piece of advice is: “If you’re going to break your own rules, you should at least have a really good reason why”

I am going to sell 15 of the bottom companies in my portfolio on Monday because if a company has proven my investment thesis wrong, there isn’t a reason to keep holding onto it. This principal takes priority over holding on for holding’s sake.

The companies I’ll be selling are:

I'll still have a pretty unwieldily portfolio, but I think its a step in the right direction for where I'm at.

Thanks to @stocknovice and the CommonStock community for the discussion and gentle yet logical nudges towards continuous critical thinking.
North Star Capital's avatar
92 companies wow! Seems like a smart move to bring that down so you can focus more on your core positions and understand those businesses better.
Nathan Worden's avatar
Yeah, while I think for a beginner it is a good idea to diversify initially, as you learn I think it's prudent to trim the companies that are clearly not able to perform as well as your highest conviction stocks.