Side Lesson - Mother of All Bases
After a 50% rally since July, my largest long term holding, BABA looked ripe for some profit taking. On Thursday, I almost made a blunder from a nearly 5 year long term hold.
These short term decisions are the hard reality that comes with long term investing. My conviction in BABA has not changed but the PnL swing was similar to a kid getting lured into a candy store.
After posting about it in the chat, I said to myself "I can take some profits up here and buy it back cheaper." That latter part of the sentence was the reverse high five sell signal. The last time I said this was in the Take Our Money Challege, and when I followed that thinking I sold the name I was buying all year for a marginal gain right before it went on a 100% run higher. I ended up in 2nd place in the challenge as a result.
As I posted the idea in the chat and did some more digging by zooming out by looking at the big picture. It was extremely clear that yes this short term run would make sense to take profits, but in the bigger scheme of things. BABA has offically left the stage 1 base that it's been in for nearly the last half decade.
This is barely the 1st inning of this new stage, this was the time to hold, not sell. Sure it can fade and pull back, maybe even to my cost basis of $120. However the tide has changed and its time to reap the rewards, not give them away for tiny gains.
Had I kept that thought to myself, I could have quietly took the 30% gain and called it prudent. But for what? When in reality, this could easily turn into a 300% gain in a year or two.
The through line here is simple: say your ideas before you act on them. The better you can get your ideas out of your head and onto virtual paper, the better you will perform. Sometimes the ideas are great, and sometimes the ideas are dumb. If I ask you what is the setup, thats code word for a bad set up. This year I've had 69% good ideas while the other 31% were dumb ones.
I share all my ideas with you, as that is one of the core reasons why you are apart of Big Picture. But by having to share all my ideas, I can avoid far more of my ideas that fail or get rid of them as quickly as possible.
This year I have taken 88 of my ideas, and you can see I practice what I pearch, my only outlier of a trade was at the depth of the bear market in April. You can see periods where I trade actively and periods where I wait. When I say I am to get out of losers as close to breakeven its very clear I do exactly that.
But having to share my ideas outloud helps keeps the winning percentage high. When I tell you to post every idea you have, its not to keep the chat buzzing. Its to help you flush out the good from the bad. Doing that this week for myself saved me from a massive mistake. As I still have every single share of BABA I've patiently bought for the last half decade.
The mother of all mistakes is the one you didn't talk through thoroughly prior to executing.
Stay patient. Think in stages, not days. And say it out loud before you click that button.
