Q: Often one hears an investment advisor (especially those with a long-term buy-and-hold style) say: “if you had bought $10,000 worth of company X in 1990, you would have $1,000,000 (or whatever) now. Yet, these same advisors (and this would include 5i) usually also advocate regular “trimming back” if any one security becomes overweight in a portfolio. But you can’t have it both ways!!—if you are lucky enough to get a 20-bagger, or 40-bagger, or (in my more extreme example above) a 100-bagger, you won’t get the aforementioned immense absolute $$ gain if you constantly trim back the winner(s). My own style typically is to just keep adding new $$ to my other (lower-weight) holdings, and thereby avoid selling my winners: e.g., I’ve had CP, ENB, NA, TRP, CAE, TD, QSR [via predecessors WEN and THI], etc., for >20 years, and have hardly ever sold any shares (and have often regretted those times I did sell a few shares for “trimming” (rebalancing) purposes. The only time I was hurt by not rebalancing was when AIG became 15% of my portfolio, and it subsequently imploded during the 2008-2009 financial crisis. But, otherwise, my general reluctance to sell high-quality securities has paid off. I am curious what comments 5i might have.....
Ted
Ted
