Comment by WalterBright

Comment by WalterBright 3 days ago

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The conventional wisdom is to sell your profitable stocks, to "lock in your gains", and sell your losers to "cut your losses."

I call that "minimizing your gains" and "locking in your losses", and just hold instead. If I "locked in the gains" I would have missed out on 10x returns.

Of course, I did ride Enron all the way to zero (!), but it didn't matter. Think of it this way - buy 10 stocks. 3 go to zero. 6 have modest returns. 1 is a 10x winner, that more than makes up for the failures, and becomes the tentpole for your assets.

WalterBright 3 days ago

I have a friend who retired, and decided to go into day trading. He spent hours each day glued to the trading portal, making trades. After a year, he ruefully admitted that he'd have made significantly more money if he'd simply done nothing.

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chii 3 days ago

> 1 is a 10x winner

out of 10 stocks, 1 being a 10x winner is an absolutely rarity and the fact that you would manage to pick it is pure luck tbh.

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  • chrismarlow9 3 days ago

    Oh there's more luck required than that. You have to get lucky many times to win at a 10x stock.

    - You have to be lucky enough to find it when it's cheap.

    - You have to be lucky enough to hold on to it even if it loses money

    - You have to be lucky enough to not sell it when it's at only 5x and hold off for the top

    - you have to be lucky enough to have bought enough initially that the return is meaningful to you

    These are the thoughts that made me clean up how I invest and stop thinking I'll get lucky at some point just rolling the dice. It's way more luck required than just buying in early.

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    • sgerenser 2 days ago

      The 4th point (bought enough that the return is meaningful) is the killer one. There’s always “that guy” that brags about buying TSLA or NVDA in 2015 and having 100x his money. Then it turns out he only bought like $500 worth. Sure, $50K isn’t nothing, but it’s not going to be meaningful to the retirement of someone making tech worker wages.

      Of course, the reason he didn’t buy more was because he knew it was a lottery ticket and putting most of his money in the S&P500 in his 401k was obviously more prudent.

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  • WalterBright 3 days ago

    QQQ is up 5x in 10 years. Being an ETF, that means many of its components must be 10x.

    I suppose it's dependent on your time horizon. MSFT is up around 10x since Nadella took over. It's more common over 20 years, obviously.

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    • biminb 2 days ago

      Are 'many of its components up 10x'??

      Isn't it the case that a few large cap stocks have the vast majority of the growth? If you didn't like Tesla, didn't like Nvidia, didn't like big 5 tech, you might have had very mediocre returns.

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    • silisili 3 days ago

      The other neat thing about ETFs is that there are so many similar, you can effectively use them for TLH to help offset future gains.

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      • WalterBright 3 days ago

        The IRS disallows wash sale deductions if you reinvest in a substantially similar investment within 30 days.

        I'm not an IRS agent and have no idea what they mean by substantially similar. You might want to talk to your tax accountant.

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  • xenihn 3 days ago

    I've done it repeatedly over the past ten years while DCA'ing. I basically made my own custom funds with 5-10 stocks, set daily purchases for a specific amount, and didn't think about it. Unfortunately I didn't invest enough each time for the amount to be significant, and I also stopped DCA'ing as soon as I couldn't resist checking, saw that I had reached or was approaching a 10% loss in my overall DCA portfolio, and stopped the auto-buys because I felt like I was starting to burn money, when this was actually the best time to continue investing. I haven't sold anything either though. Overall I'm up 80%, which is only $50k.

    I think DCA is the most effective investment strategy. Unfortunately I don't have the discipline to keep it up during a downturn. Next time I try it again with picked stocks will be my 4th time, but for now, I'm doing it with index funds. I'm not going to feel as inclined to pause my purchases during an index fund downturn.

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    • lazide 3 days ago

      Well, also the market has done almost nothing but go up over the last 10 years, correct?

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      • xenihn 6 hours ago

        No, I went under significantly multiple times, including 80%+ losses that eventually reversed on some. Though these dips wouldn't have been as drastic if I had not stopped DCA purchases.

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davedx 3 days ago

Exactly. I started buying NVDA in 2020 and I still hold almost all of it.

If you do rebalancing then you might as well hold an ETF that does it for you at the lowest cost. If you hold individual equities, keep your winners.

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