I'm curious on the thought process folks in the "buy and hold" realm use to determine what to do with winners. And I suppose - I should break it down further; decision process on mid/small/micro caps.
Some ground rules, so to speak, on my question:
* Nothing against "traders" - but I'd consider myself more of an investor in the classic Munger/Buffett sense. I never buy anything I don't see holding for years - I don't think I've ever sold positions that weren't long.
* I do think there's a difference between large/mega caps and the downstream small caps
* Firm believer that IRA/401k/etc elements are different than taxable accounts - so only consider the latter.
I'm now closing in on 7 years of individual equity/taxable brokerage investing and I've commented elsewhere my thoughts on tracking and philosophy -- and I think a generic key is "know yourself as an investor", but one nut I just cannot crack....
A megacap - NVDA would be my baby/highlight. Yes, I got lucky - but even with ridiculous gains to date? The revenue is real. The multipliers YoY may be gone - but I believe in both the segment, the company, and I can bring 10-Q/K reports that support my thinking. I've *never* really considered profit-taking. Again - I'm a buy-and-hold guy.
But downstream - mid cap and smaller? That gets hard.
Early in my investing journey - I used a pretty simple equation with my winners: Pull the initial cost basis and let the rest ride as "house money".... but really? Again - investor, not a trader - that doesn't make logical sense either. Either it's a good investment with longterm prospects... or... it isn't. I'm not playing with the (sorry, but it is) silly WSB crap - playing trader games on GME or whatever.
Let me give you 3 examples from 3 different vantage points --
\- CDE/Couer Mining. I don't time, but sure - timing comes into play here. Bought in in 2020 (\~3 a share). I bought in because I thought it looked like a bargain. A year later? I did my initial/old idea of "cover your cost basis, let the rest ride".... And eventually just gave up on the remainder - too soon.
\- QUIK/Quiklogic. I bought in because I work in IT - and I was just highly impressed by them at a booth/conference. Fabless eFPGA/FRGA. Ironically at the time? I was thinking voice command... Unlike CDE? I was stubborn about QUIK. And I probably shouldn't have been - they've had some leadership changes and the technical world has changed *so* rapidly. And the most recent 10-Q? Big beat. But... still not profitable. I suppose I've been rewarded for holding - but at this point? Maybe I *should* take the money and run. I *do* still like the company -- but it's a niche player in a bigger industry.
\- CENX/Century Aluminum. Bought in 2022/2023. Because I read an article about next gen plant expansion plans, considered their bauxite mining elements, thought about the increasing.... nationalism... with onshored production (and they got some nifty tax breaks BITD). Still believe in the company and its plans - but is it topped out?
I'll reiterate -- the mega/large caps? I think that's easy - growing revenue, even if not multiplier (anymore). Keep holding because until someone dethrones them? They're still the backbone/stalwarts in a portfolio. I don't even consider taking profits on NVDA or AAPL or AMZN and I don't care if they underperform for a quarter or even a year -- unless I see evidence of a real slide.
But - mid/small/mico? I *want* to apply the same idea -- does the industry/segment have legs? Does the stock look like it's pacing/beating competitors? Do the 10-Q/K reports show not just promising growth, but optimistic projections?
Maybe a "buy-and-hold" investor shouldn't even be bothering downstream - stick with the large/megacaps.... But - if you dip downstream, is it pure charts? Set a price point where you just figure you made your money and then reallocate it? Even if you consider yourself a long haul/buy-and-hold investor, with smaller investments - there's still gotta be a point where you decide the equity is simply topped out, no? Or no?
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