k_babysit4exit

The most common j4 exit_timing are

1. BB) damage control .. purge bleeding/toxic assets and improve “quality” of your portfolio.
2. AA) optimize asset allocation .. including cashing out on an _overvalued_ stock.

[[Irrational Exuberance]] P12 talks about “investors who can commit their money to an investment for ten full years”. About half the (Hundreds) analyses in the domain talk about long-term investors, but I don’t know how common they are, like 20%? I think most retail investors are driven by AA+BB to sell within 10Y. Retirement accounts and ETF are something else.

— mostly for BB:

K.Hu’s description of his 2022 timely exit is yet another powerful nudge “You must babysit your stocks, and time their exits“. I don’t buy that idea. I have an opposing view. During the early 2022 decline in SP500, most [1] professional/institutional/smart money have exited or gone short equities, but some x% of the smart money stuck to buy-n-hold. Buffett once endorsed DCA. With DCA, you keep buying down the curve. This is a clash of philosophies.

This “clash” is swept under the carpet most of the time, but becomes a recurring theme whenever I review/evaluate my stock investment. The clash is related to many other recurring themes listed below.

What to avoid to get”marketReturn” explains why any selling is problematic.

[1] herd_instinct .. usually more emotional and less rational, and often lead to price insensitive selling

— hot stocks .. often requires BB. As I said, I am not keen about hot growth stocks, including tech stocks. Out of 200+ stocks I own, about 1% of them are hot growth stocks where I invested more than $100 each.

When I do invest in hot stocks, I am like Cathie Wood, not like K.Hu.

For hot or other stocks, I think most retail investors (not sure about institutional) would sell at a declining market. That leads to over-selling, creating buying opportunities for buy-n-hold guys like Buffett and Wood.

— buy-n-hold .. “3Y hold” rule implies no babysit for exit. After 3Y+, I do sell for AA reasons.

Buffett usually holds for decades.

— analysis or babysit .. entry/exit timing always requires price forecast and Sys2 resources. Some investors (maybe half of them) have to babysit before the exit. Some investors like K.Hu would “analyze” before the exit.

I don’t like babysit or analysis. (I only perform my 3-min due diligence at entry.)

— firewall .. is under threat when (for BB) you try to time the market for exit

— recreation .. I feel BB is toxic and incompatible with recreational investing.
Even AA can be considered incompatible.