11 Comments
Jun 17, 2021Liked by The Science of Hitting

Awesome post. When to sell has always been a question of mine. In hindsight biggest mistakes was I sold some FANGM too early and held on to crap too long.

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Jun 17, 2021Liked by The Science of Hitting

One of Ray Dalio's principles applies here: "The who is more important than the what". I think that is the disconnect. You are betting on what the people will do, and there will be nothing in the current business or assets that will reflect that. You just need to get that right. You can obviously still be down 90% on Amazon or down on Microsoft for a decade. There is a world of difference between the valuation of the assets being "a little silly" and it being insane. A lot of investors over the last decade have learned the same lessons you have. You can definetely overpay for the "who". I am guessing there will be a lot of that given the current valuation of many great businesses (i.e. SHOP etc). The principle is that the who is more important than the what. Not that the what doesn't matter.

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Apr 23, 2022Liked by The Science of Hitting

Great read and thank you! What about trimming when a position has meaningfully exceeded your estimate of IV? The article talks about selling, which i'm inferring means to exit the position. Is it possible that you can reflect the valuation concerns and increased uncertainty through a smaller position size, whilst still having some exposure so you can still benefit in the event that the business surprises to the upside over time? There's a nice quote from Andrew Wellington (Lyrical Asset Mgmt): “There are fantastic risk/reward opportunities that you are willing to do at 3% of your portfolio that you might be unwilling to do at 10%."

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Jun 18, 2021Liked by The Science of Hitting

Alex, this is very timely and an excellent read !!

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Jun 17, 2021Liked by The Science of Hitting

This was a great read, thanks Alex

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