Saturday, February 2, 2008

Tough Love

After I retired, four years ago, I put the bulk of my proceeds into conservative mutual funds, but held a little back to do some trading. Last year, I took stock of my performance and the performance of my mutual funds.

My funds had made 7 or 8 % a year. I didn't write home to tell everybody about it.

In my trading, I had taken on relatively small positions in a bunch of stocks I had no conviction in, and last year I realized that I had small gains in a number of them, but the profits were overwhelmed by bigger losses in a few of them. I was getting nowhere, slowly.

But, by that time, I knew what worked for me and what I needed to get better at. I decided to concentrate my mind: I turned in all my mutual funds for cash and swapped all my stocks for a few shares of GOOG.

For all of 2007, my mutual fund deal was a mistake of historic proportions. In 2008, I became a market maven for the move.

Buying GOOG, on the other hand, was an immediate success - it went up and all those stocks I sold went down. Until lately.

In retrospect, what I should have done is, sell GOOG with the same gusto that I applied to flushing the funds.

But I told myself I was a long-distance runner in GOOG. I had a thing going on with GOOG. I was in love.

I should have sold GOOG and never looked back. But I couldn't. I traded a few shares, a couple of times, but quickly bought them back at the first opportunity. I couldn't stand the thought that GOOG might keep running up without me.

I need to let GOOG go, sometime. I know that. I'm not talking about when it's over the hill. I need to let it go sometime when it's still young and frisky and going higher, but maybe a little ahead of itself temporarily. That's when I need to do it.

Give it up and get over the idea of owning it, like Cody did. And then, maybe, someday somewhere down the road, I'll find it again, in chastened circumstances, down on its luck and needing a friend, and I'll throw open my arms and welcome it back like the Prodigal!

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