plessas @plessas: "👨🏻‍💻 Thesis: Cut Your Losses..."

Greece

Edited

👨🏻‍💻 Thesis: Cut Your Losses Short (Not Too Short) - Let Your Profits Run 👨🏻‍💻 Investing in the financial markets requires a delicate balance between mitigating risk and maximizing returns. The adage “cut your losses short (but not too short) and let your profits run” encapsulates a strategy that can enhance portfolio performance and ensure sustainable growth. Here’s a look at my own portfolio and how this principle applies. Cutting Losses Short Analyzing the bottom-performing assets in my portfolio underscores the importance of recognizing underperformance early. By setting predefined stop-loss levels, we can limit exposure to assets that are not meeting performance expectations. This approach helps in conserving capital that can be reallocated to more promising opportunities. However, it is crucial to avoid cutting losses too hastily. Some assets might experience temporary dips due to market volatility but have strong fundamentals that can lead to recovery. Distinguishing between a temporary downturn and a fundamentally weak investment is essential. Letting Profits Run On the other side of the spectrum, my top-performing assets illustrate the benefits of allowing winning positions to flourish. By resisting the urge to lock in gains prematurely, we can capitalize on the full growth potential of high-performing assets. The principle of letting profits run is about recognizing the momentum and strength behind a successful investment. $NVDA (NVIDIA Corporation) and $AAPL (Apple) with substantial gains, exemplify how sustained performance can lead to significant portfolio appreciation. Employing trailing stop-loss orders can protect profits while providing room for further upside. My Portfolio Performance Here’s a snapshot of my top and bottom-performing trades (closed positions only): ⬆️ Top Performing Trades: $QCOM (Qualcomm Inc): $433.03, $SPOT (Spotify Technologies SA): $403.14, $NVDA: $362.52, $ARM (ARM Holdings PLC): $342.44, $JPM (JPMorgan Chase & Co): $296.87, $AAPL: $281.81, $AVGO (Broadcom Inc): $249.99, $BAC (Bank of America Corp): $221.90, $LLY (Eli Lilly & Co): $183.98, $BTC: $180.35. ⬇️ Bottom Performing Trades: $HAS (Hasbro Inc): -$136.31, $DIS (Walt Disney): -$112.16, $SNOW (Snowflake Inc.): -$109.63, $NKE (NIKE): -$90.68, $FMC (FMC Corp): -$85.44, $PLTR (Palantir Technologies Inc.): -$84.89, $LULU (Lululemon Athletica Inc): -$80.48, $VIX.OCT: -$78.64 (this one was a hedge), $ADYEN.NV (Adyen NV): -$74.75, $BMY (Bristol-Myers Squibb Co): -$72.52. Practical Application To effectively implement this strategy, I recommend the following steps: 1️⃣ Set Realistic Stop-Loss Levels: Determine stop-loss thresholds based on asset volatility and fundamental analysis. This prevents premature exits and ensures that only genuinely underperforming assets are sold. 2️⃣ Monitor Performance Regularly: Continuously review asset performance against market conditions and company fundamentals. This helps in making informed decisions about holding or selling positions. 3️⃣ Utilize Trailing Stops: Employ trailing stop-loss orders for profitable positions. This technique locks in gains while allowing the investment to benefit from upward momentum. 💲 -TLDR- 💲 The strategy of cutting losses short (but not too short) and letting profits run is about disciplined decision-making and patience. It involves protecting the portfolio from significant downturns while maximizing the potential of winning investments. By adhering to this balanced approach, we can enhance our portfolio’s resilience and growth prospects, leading to long-term financial success.