@galumay
Would you mind sharing your strategy on locking in profits as this is something that intrigues me as there is no right or wrong answer. eg. Trailing stop or price target....sell at high and buy back on retrace....
Cheers
Trav
Hey Trav, my personal strategy as an investor means I dont use stops of any sort, I see them as a tool for traders and useful for them, but not helpful for me. I dont have any hard and fast rules for selling, but in general if nothing material changes in the business and the price gets a long way ahead of my range of calculated value I may sell all or part of my holding.
As long as the thesis remains intact and management continue to execute in a responsible manner then I will prefer to hold regardless of price, if the range of IV changes pounethical sitively because of increased cash flow, increased margins, decreased competition, etc. then the decision to continue to hold is easier.
The hardest decision for me has been when management fail to execute, or actually start to behave in an unethical manner, in these cases I have been to slow to sell out. AHZ is a clear example of where I specifically identified management behaving in a very devious and unethical manner and I failed to sell out.
Conversly some of my best multibaggers have been high conviction positions where I averaged down over a fair period of time with businesses that were out of favour with mr market - NWH which is a 7 bagger for me and CDA which is now a multi bagger also.
So there is no rule for all situations, and many times I have made the wrong decision, mainly due to psychological biases.
You are correct, there are no right and wrong answers, its dynamic, and as an investor I feel I am constantly learning and adding information into the loop. As I said, the lesson with LBL is that i fell for the anchoring bias and failed to increase my position size, despite my range of IV being way higher than the price at the time and also my high conviction that the business as well managed and had some competitive advantage.