Cutting the Fat

I mentioned it briefly the other day when discussing his book, but Jim Rogers believes that concentration (rather than diversification) is key to making boatloads of money as an investor. Find the investment idea that you know a lot about, and have developed confidence in, and then invest in it with conviction (i.e., heavily). Along a similar line of thinking, as an investor, Rogers believes that you should operate as if you were only going to make 25 trades in your lifetime. If that were the case, you would be much more careful and prudent, and would not feel any compulsion to always be doing something. Just identify and learn about what you think are the very best ideas, put your money to work, and then wait.  After all, secular cyclical trends don’t happen in days, weeks or months, but over years and decades.

Today I have been spending some time looking at my portfolio, figuring out which ideas are the long-termers, and which ones are peripheral and should probably be sold (regardless of whether they are up, down, or sideways). Feels healthy to do.