My new advise: USB
My new advise: EPD
My new advise: UPS
My new advise: SBGSF
I really enjoyed listening to David Gardner talking about conclusions from his history of stock picking.
I especially liked conclusion No. 2: “understand your real biggest losers”.
Excerpt from the podcast:
If you do the math, my real biggest loser I haven’t even mentioned yet. If you imagine $1,000 or $10,000 being put in each of these… Let’s just go with $10,000. Well, if it loses 90%, how much are you left with? The answer is you’re left with about $1,000. From $10,000 you’re down to $1,000. You lost $9,000.
But the real biggest loser for you, if you’re an investor and if you’ve been acting over the long term, I bet you realize that it’s not the bad-performing stocks. It’s the megawinners that you sold too early. It’s that you didn’t stick with big winners and I’m going to share the math with you to make it obvious in a second.
Because my real biggest loser was a company called ARM Holdings. The ticker symbol was ARMH. This is a British-based company that did R&D for the chip industry, so a lot of semiconductor companies would use their research in order to design better, faster, cheaper chips. ARM Holdings, history will show, I recommended in October of 2003, so 15 years ago, this month, at $5. I then re-recommended it two months later when it had crossed $6. That was in December of 2003.
Well, fast forward to June of 2009. So almost six years later the stock was languishing. It was at a dividend-adjusted closing price when I sold it, of $5.38. So I paid $5 for it six years before. I then added some at $6 and I’m sitting there. The year 2009 was not a good time. I was probably really sad at the time about how badly the stock market had done. I looked at ARM Holdings, a double recommendation for me, and it was at $5.38 and I said to all my Stock Advisor followers, listeners, and members to sell. We’re out.
Here’s why ARM Holdings is my real biggest loser. Because when the company finally got bought out in September of 2016 the share price that day was at $67.77. So two different positions from $5 and $6 would both have been 11-plus baggers. And if you do the math on a $10,000 investment, you’ll see very quickly that I passed up literally hundreds of thousands of dollars in that one mistake; and my worst pick ever, Satyam, from a $10,000 start we lost about $9,500.
My new advise: GD
My new advise: NOC
I really liked MMM latest blog post on How to Retire Forever on a Fixed Chunk of Money.
It has great examples with real numbers. All you need is $500K in investing…
My new advise: STT
I really liked an interview with Stanley Druckenmiller.
Stanly has perhaps the best 30 year track record in money management history. He’s compounded over 30 percent returns and he’s never had a down year. Over a hundred and twenty quarters he’s only lost money in five
My new advise: JAPAY