This article references something called The Coffee Can Portfolio. The idea of a coffee can is simple: You try to find the best stocks you can and let them sit for years. You incur no costs with such a portfolio, and it is simple to manage.
Robert Kirby, the Portfolio Manager who first introduced the idea recognized that most professional investors in the stock market focused on preserving capital as opposed to growing it. As a result, when their portfolios became “unbalanced”, that is, their winning stocks started to become large portions of their portfolios, they trimmed those positions and transferred capital into their “less successful” investments, the ones that had gotten “cheaper”.
Although that might sound prudent, what is really happening is that money is being transferred from the most dynamic companies, to the least dynamic companies.
This idea helped me become a longer term investor, and as a result, a better investor.
This article references something called The Coffee Can Portfolio. The idea of a coffee can is simple: You try to find the best stocks you can and let them sit for years. You incur no costs with such a portfolio, and it is simple to manage.
Robert Kirby, the Portfolio Manager who first introduced the idea recognized that most professional investors in the stock market focused on preserving capital as opposed to growing it. As a result, when their portfolios became “unbalanced”, that is, their winning stocks started to become large portions of their portfolios, they trimmed those positions and transferred capital into their “less successful” investments, the ones that had gotten “cheaper”.
Although that might sound prudent, what is really happening is that money is being transferred from the most dynamic companies, to the least dynamic companies.
This idea helped me become a longer term investor, and as a result, a better investor.