Fishing works for you and is all that matters in my opinion.
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Too much to pay for a stock pick?
It must address to some degree how much the investor feels comfortable putting at risk. And it invariably has to come down to how prepared the purchaser is. This may mean researching a lot. For me it's always a combination of finding comfort in the business model and management's success over the past two years or longer. I rarely get involved without that much available to me.
I never approach the checkout counter in a store without knowing what the cost of my items is. It has nothing to do with what is affordable, but everything to do with my need to be comfortable in paying the asking price. When it comes to a stock, I've got to believe that the price I pay today will pale in comparison to the value I see ahead. If I don't find a pleasant number floating in my head, I will not buy the stock. Once Trump is firmly in office, I think it would be reasonable to expect to find HLX back above $10, given that the Gulf of Mexico is on the cusp of breaking wide open. Ditto with MDR. I can see $8+ in the case of MDR.
I'm very open on the NGL and ALDW boards as to my expectations and why.
That said, then, if I don't seem to have concrete ideas as to near-to-mid-term expectations, I don't buy the stock. I know that sounds like a lot of needless pressure but my wallet would tell you otherwise.
When it comes to accepting gains---I have a saying I coined some years ago: "I never met a profit I didn't like."
I NEVER think little of a profit no matter how trifling it might seem to others. A win is a win. Add enough of them together and you become a winner!
Liquidating is one thing, taking profits is another. I love to take profits and believe strongly in doing it. But the only time I liquidate is when I no longer see opportunity to eke out strong gains AGAIN. If a stock is handing you gains, why would you kill the goose? Grab them thar golden eggs and feel blessed for you are.
When I need cash, I'll look to winners with cash-rich gains on the table and, of course, I'll sell off some. But I almost never sell more than half of the position except for when I've soured on the stock itself. That's when I dump it all. Some insist I marry some of my stocks. But I know better for it's important to love your wife despite the ups and downs. So long as she appreciates you for who and what you are, who could ask for more? Same with a great pick---marry the damned sucker and love that relationship!
In the end, then, I buy when I see potential. I sell when I need money for something with greater promise. And I liquidate when I need to divorce myself from a dying company.
Lastly--- It's hard to reset our rules when we're not behind them 100%. This is an easy one for me as I've created a few rules I almost never violate. An example or two:
I sell spec stocks when I've enjoyed the expected run. I always take at least half of the gains and put them into an income producer, no ifs, ands or buttheads (me, lol). This ensures that I'm respecting my own rules I designed to protect my interests.
The year 2015 handed me a 46% overall gain in the market. This past year it came to 65.9%. If you've been ploughing cash into some of these picks, then you're enjoying similar gains.
I have no projections for this new year now upon us but I will say I'm having a fantasy of ALDW moving to $27 or more and NGL possibly making it into the $30's+. With deep positions in both, I may make it into the 70% range or more.
One last word--- four years ago I held 83 individual stocks. I did well but gradually came to see that for me, at any rate, embracing a lot of picks meant I was not free to really get behind my choicest picks. If I'm working with $200K, for example, putting half of that into a stock I'm absolutely positive is about to break out (within 6 months or so) may benefit me dramatically whereas spreading it out equally over thirty picks is the worst dilution imaginable.
I want to find winners and really get behind them. This is why I've got 71% of my investable cash in these two picks. I see no point in putting a lot of money into any pick with limited upside.
CEQP is an incredible find and I can easily see $35 or more later this year. My cost basis is $11.59. I'll be happy with HLX at $11. MDR will please me at $10. And KNOP is the one I know I need to chase and accumulate.
I think I've run out of stuff. I do hope it has value to some folks here. Looking forward to a fantastic new year with all of you!
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