Guru914

The Wisdom of Half Positions

On Apr 21 12:47 PM CloroxCowboy wrote:
>If you think you know any more about the future performance of the first stock than the second, you are mistaken.

You don't know that's why selling half is a false notion of being conservative. It only makes some sense after a long bull market move as a strategy for incrementally moving into cash on all your positions on your way to being in "all-cash" at the end. Or, conversely, as a tactic for moving from "all-cash" into fully invested at the beginning of a market move.

Perhaps stating the strategy in the inverse - scaling up by adding to a successfully working position - makes more sense.

The Wisdom of Half Positions

I've tried this and always found I wind up with too many "half positions". Starting at the beginning of a bull market or market consolidation phase, and then scaling out of positions (and reinvesting those proceeds into other stocks) always leaves me with too many positions to track and herd.

Money (stock positions) are fungible. If I make 25% in a stock, I don't much care that I make the next 25% in the same stock or in 2 (after having sold half and reinvested).

As a matter of fact, selling half forces me to have to find a second stock that performs as well as the first. You know how what you have has (and may in the future) performed but don't really know how what you're getting into will perform.

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