“Really, what matters, in the long run, is sticking with things and working daily to get better at them.”– Angela Duckworth
When you’re growing up, parents or teachers occupy your time with activities that may seem trivial but are actually valuable.
For example, they might give you word puzzles to learn how to distinguish a pattern and follow it.
Playing competitive sports can also sharpen one’s strategic sense as we experiment with different match-ups to improve the chances of winning.
When one researches the history of successful companies, there is often a strategic pattern underpinning how the organization works.
For investors, it’s crucial to understand what has worked and why, when making individual stock calls.
When it comes to portfolio management, the idea of sticking with what has worked is a subject of considerable debate in the investment world.
The concept of rebalancing, or taking some gains from your winners so a portfolio’s value is not concentrated too much on one or two holdings, is as a standard operating procedure for most fund managers.
Interestingly, fabled investors Warren Buffett and Charlie Munger disagree.
They believe that selling positions which have appreciated makes no sense, regardless of how much concentration they represent in a portfolio,
In my opinion, investors are fortunate to own a winning stock, so holding on and sticking with what works is usually the strategy I would advocate with the caveat that each situation is different.
Many clients get nervous if one position is too much of their portfolio’s total value.
Regardless of how one approaches the portfolio management issue, sticking with what works is high on my list, just as Mrs. Duckworth wisely noted.