Friends,
One of our favorite quotes about life comes from the late Maya Angelou:
"Do the best you can until you know better. Then, when you know better, do better."
It seems so simple. Young children know this inherently.
But adults don't: we get married to our ideas. When evidence surfaces to make us rethink our ideas, we look the other way. The threat to our identities is often more powerful than our fidelity to the truth.
No one is immune from this -- including us.
That doesn't mean that (eventually...painfully) we can't evolve. Take the idea of buy-and-hold investing: that's how we often describe our style of long-term investing. It's what stops us from wasting our time and money becoming day traders.
At the same time, however, we've started to wonder if that's what we should be aiming for. Perhaps a better -- more honest -- moniker would be "Buy-and-Monitor" investors.
Let's face it: we sometimes invest in companies that aren't as great as we thought. And as Maya Angelou would counsel, once we "know better", shouldn't we "do better" by parting way with those shares?
Over the past year, Stoffel has ventured into these waters -- attempting to winnow his portfolio down to 15 or less stocks. The results, thus far, are encouraging:
- If his portfolio in early September was exactly the same as it was on January 1st, it would have returned 3% year-to-date.
- But by selling stocks where he's lost conviction and buying ones with more conviction, his portfolio has returned over 11% year-to-date.
To be clear, this doesn't mean he doesn't invest with a long-term mindset. Over 40% of his portfolio is invested in Mercadolibre, Axon, Amazon, and Shopify. He's held all those for at least seven years (14 for Amazon).
But it does mean that instead of blindly following his original instincts, he's willing to constantly monitor whether or not a company's moat is as strong as he once thought.
The world is a dynamic place. We have to be dynamic learners to survive and thrive. Then, when we learn better, we can do better. That's a solid recipe for long-term success.
Wishing you investing success,
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Brian Feroldi, Brian Stoffel, & Brian Withers
Long Term Mindset
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