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Investing/Strategies / New Paradigm Investing
|Subject: Re: Opportunity costs||Date: 12/9/2012 7:10 PM|
|Author: rjf53||Number: 65540 of 74298|
My own slowly evolving philosophy is to "buy in thirds", which I've very much learned from the many posters on these boards, but to also attempt to go somewhat overweight as I'm buying in so that I can do some "selling in thirds" as a position vastly increases in value. That way I feel I can lock in some profits while still allowing a company I believe in to continue helping my portfolio. Rarely do I have much sitting in cash, as I find there are significantly more companies I'd like to own than I have in funds.
Except for the "not sitting in cash part" I have done a variation on this quite often. Unfortunately, all too often that first third position has been for what ultimately becomes a small position in a great company and the positions where I had the opportunity to add a second and third position I got to do so for cause. :<(
I now try to take a much more individual approach to decide whether I should go large early and what price is required for me to take on that additional risk. I had a real world example of this in the last couple of months with Arcan Resources (Canadian) where I tried to explain my thinking over on the SD board (few inhabitants so we, OK mostly I, talk about anything.)
As it turns out I ended taking a 10% position all at once a day or so later at $0.78, which knock on wood has traded as high as $1.40ish and I believe closed around $1.25 on Friday.
Due to the fundamental news that broke I've upped my target a bit from $1.25 which would have left me with a de-risked position with an effective cost basis (my made up term) of $0.31 which would give me a kind of, sort of, 3 bagger on my remaining shares and still leave me somewhere around a 7 or 8% position within my overall portfolios.
Believe me that target hasn't been raised a great deal. (not sure exactly what it is yet to be honest)But especially after my little look back on the NPI picks you can be certain that I am well aware that any pain I might feel by the share price continuing up after I reduced my position is nothing compared to what I would feel if I gave all back.
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