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Losers 👎
Investors like to promote their great picks and show off their wins. Let's be honest, not every pick is a home run and we all have some losers.

Losers have come into the forefront of my mind recently. There are 3 things that have brought losers to mind:

  1. Recent market events have people seeing red
  2. The MLB season has started and I will be reminded every day for the next 6+ months that my Pittsburgh Pirates are the worst team in baseball
  3. I have been reading Fooled by Randomness by Nassim Nicholas Taleb

My top losers are (maybe unlucky, maybe not):

  1. $CHWY - down 55.54% since purchase
  2. $CRON - down 46.05% since purchase
  3. $COIN - down 33.61% since purchase

Oh no! These are terrible returns (losses)! What ever will we do? When do I sell? Should I double down?

First, I have detailed in previous Guardrail posts, I have developed a framework to help control the emotions around loss. I set a minimum holding period of 3 years for each new position so there is a measurable amount of time to evaluate the holding. As we know, the market is volatile and periods of bear markets can quickly turn to bull markets and vice versa (see $CMA, $XLE, $VDE, $SBUX).

Second, I have built into my Scorecard to value price appreciation over cheap/discounted stocks. This is an idea I have borrowed from David Gardner and Rule Breaker Investing - "Rule No. 1, let your winners run high. That's No. 1. I hope you know No. 2. No. 2, add up, don't double down." Therefore, I do not need to keep building and adding to losing positions. This is a way to mitigate loss by not continually adding to beaten down and "cheap" stocks.

Finally, I like to look at the big picture and all of my holdings. The three positions above only account for 1.5% of my Taxable Portfolio. To counter act these "Losers" I have multiple Multi-Baggers (maybe luck, maybe not):

  1. $AAPL - up 182.40% since purchase
  2. $VDE - up 177.46% since purchase
  3. $CARR - up 166.95% since purchase
  4. $CMA - up 157.77% since purchase

These 4 Multi-Baggers make up 21.1% of my portfolio. Even though it is easy to look at those terrible losses, zoom out and look at the bigger picture. Your winners will most likely far outweigh your losers! Just like the stock market, zoom out and you will see that the trend is up and to the right.

Volatility is the price of admission in this game, and we need to build the mindset to be able to handle these ups and downs. Understand that some events and picks (winners and losers) are random and will work themself out.

One thing that is not random and will not see multi-bag gains is the Pirates win total...

Happy Baseball, Happy Sunday and Happy Investing!
The Motley Fool
The 6 Principles of a Rule Breaker Portfolio | The Motley Fool
No. 1: Make your portfolio reflect your best vision for our future.

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