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December 18, 2019 | You Can’t Kiss All the Girls…

Lobo Tiggre, aka Louis James, is the founder and CEO of Louis James LLC, and the principal analyst and editor of the Independent Speculator. He researched and recommended speculative opportunities in Casey Research publications from 2004 to 2018, writing under the name “Louis James.” While with Casey Research, he learned the ins and outs of resource speculation from the legendary speculator Doug Casey. Although frequently mistaken for one, Mr. Tiggre is not a professional geologist. However, his long tutelage under world-class geologists, writers, and investors resulted in an exceptional track record. The average of the yearly gains published for the flagship Casey publication, the International Speculator, was 18.5% per year during Tiggre’s time with the publication. A fully transparent, documented, and verifiable track record is a central feature of IndependentSpeculator.com services going forward. Another key feature is that Mr. Tiggre will put his own money into the speculations he writes about, so his readers will always know he has “skin in the game” with them

My friend Doug Casey warns investors about getting carried away buying stocks, saying, “You can’t kiss all the girls.”

This is a great way of summing up important advice; one must focus so one can develop expertise and execute well. And you can’t fret about the ones you don’t kiss—because no one can kiss them all. It’s particularly apt because trying to kiss all the girls may actually be the fastest way to collect the greatest number of black eyes known to man. In my experience, the same thing is true in buying stocks.

This is on my mind because a longtime reader of my work just told me how much she appreciated the idea of our new My Take service. She knows she has way too many stocks bought over the years, and she needs help pruning her portfolio.

I can’t advise her individually on what to buy or sell, of course, but the takes in My Take (currently 112, but soon to be many more) do give readers a summary of the story, the pros, the cons, and my general take—thumbs up or down.

Well, maybe a bit more than that, since I recognize that one size doesn’t fit all. If I think a company is a great but just not for me due to my own investment priorities, I’ll say so. And I will go further than just saying it’s not for me if I think a company is a serious menace to any investor’s capital.

It’s like Consumer Reports for resource investors.

But I didn’t sit down to write a My Take sales pitch. I really think the idea that you can’t kiss all the girls is very important. But it’s just a general idea, so let me be more specific…

 

How Many Are Too Many?

There is no single correct size for anyone’s portfolio. It’s clearly important not to put all of one’s eggs in a single basket. But it’s just as important not to spread yourself so thin you make avoidable mistakes. Worse yet, if you spread your investable funds across too many positions, they’ll be so small that even a 10x winner won’t amount to much.

Fine. But how many is too many?

Well, I do have a rule of thumb that may help you out:

One should only invest in as many stocks as one has the time to come to understand well.

In this context, “understand well” doesn’t mean “know everything about.” Not even the CEO of a company knows everything about it. And I don’t mean that you need to study geology so you understand all the technical aspects of drill results or other important news in press releases. Sometimes even I have to take time to think about what some company news means—and I’m not too proud to consult with experts who know more than I do if I don’t understand something.

But if you see company news and have no idea what it’s about, you probably have too many stocks.

 

What If I Already Overdid It?

If you know you’ve let your portfolio get too bloated, it’s time to start pruning.

Pick your favorites—stocks you’re keen on and about which you can promise yourself you’ll take the time to study—and drop the ax on the rest as favorable exit opportunities present themselves.

Tax Loss Season, by the way, is not a good time to do this.

Selling when others are selling usually means lower exit prices than you have to realize. It’s too late to sell before Tax Loss Season now, but unless a stock is hit with bad news specifically for the company, next month should see better exit prices for many beat-up shares.

For more free help picking which companies to prune, please see my article on why and when to sell.

For specific guidance on the 112 companies I’ve covered so far in my “Consumer Reports for resource investors” service (see list below), please subscribe to My Take.

Regardless of how you do it, cleaning up a bloated portfolio would make an excellent New Year’s resolution.

I highly recommend it.

Sincerely,

 

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December 18th, 2019

Posted In: Louis James

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