Today I start my quarterly analysis of my portfolio. I do it once per quarter to take the emotion out of it and make it businesslike.
But in-between analyses, I read. I read a lot of stuff, and occasionally I see ideas where I say, “That looks like a good idea!” After that, I record the ticker symbol and throw away the reason why it seemed good.
Why do I do it this way? Several reasons:
At the 2021 SALT New York conference, which was held earlier this week, one of the panels on the main stage discussed the best macro shifts coming out of the pandemic and investing in value amid distress. The panel featured: Todd Lemkin, the chief investment officer of Canyon Partners; Peter Wallach, the managing director and Read More
1) Quick decisions are rarely good ones. Lots of people have slick pitches. Far better to wait a while, and analyze the opportunity coldly, and compare it against other ideas.
2) If I buy this, what should I sell? Not that you have to sell but it is a good exercise to make you improve the portfolio. It might indeed be a good idea, but you may have better ideas still in your current portfolio.
3) I need to analyze all opportunities through the same prism, and I need to understand them myself, not just what someone else told me. If I don’t understand why I am buying, I will not understand when to sell.
The truth is, the need for urgency in investing is overrated. If an idea is good today, it will likely be good three months from now. Few investment ideas move linearly, and many ideas seem to fail before succeeding. Most companies that I have averaged down on have proven to be successes.
So take your time, analyze dispassionately, and compare new possibilities versus existing positions. And don’t trade much. It takes time for most investment these to work out. So choose a small number of new ideas to enter your portfolio, while selling a similar number of old ideas.
I don’t normally do this, and I might not do it in the future, but here are the tickers for the companies that looked like a good idea over the last three months:
ABC, ADP, AGN, AGU, ALTV, AMED, AMGN, ANH, APD, BAGL, BAM, BAX, BBBY, BBT, BCR, BCS, BWP, CAM, CAN, CDI, CHL, CHRW, CLR, COH, COP, CTXS, CVU, DDEJF, DDS, DGSE, DLLR, DLR, DRI, EFII, EGAS, EOG, EP, ESRX, FDO, FSYS, FUL, FWM, GCI, GEL, GG, HA, HK, HLF, HRB, ICE, INOD, INVC, JBLU, JSAIY, KM, KMI, KMP, KR, LH, LNCO, LNVGF, LNVGY, LUK, MAT, MCD, MCO, MFA, MGA, MHLD, MOD, MON, MRO, MSG, MU, MUR, NABZY, NBL, NCR, NOG, NOK, NSANY, NSIT, NSRGF, NTE, OGZPY, OPY, ORCL, OXY, OZM, PBI, PCL, PCM, PDCO, PEP, PERY, PLAB, POT, PZE, QBCRF, RAD, RCII, RCKY, REP, ROST, RYN, SAFM, SANM, SE, SLW, SNBC, SNTA, SWM, SYK, TEN, TGT, TSN, TSO, TU, UCFC, UL, UNP, URBN, VE, VOD, WACLY, WHR, WLP, WMB, WMT, WSBC, XEC
As with anything I write, do your own “due diligence.” But thanks for reading me. I appreciate all of my readers.
By David Merkel, CFA of alephblog