I love this investing quote from Michael Martin:
Price targets cut your profits at the exact moment you should be either adding to your winners or just letting them run. Let the market tell you when the move is over. Price targets are about predicting the future and human beings are horrible at prediction at best.
He goes on:
When you let go of price targets, you’ll focus on “best practices” and that means financially letting your winners run, emotionally letting go of control (you don’t have any in the first place), and spiritually living a life that’s worth living.
I joke about price targets and Wall Street all the time…here is a recent one:
I’ve raised my Twitter price target to $80 because I’m still long. I’m sure some bank will pick this up as research $twtr
— Howard Lindzon (@howardlindzon) June 12, 2018
When it comes to stocks, I keep my best practices pretty simple….
Don’t let trades become investments and it’s ok to let investments become trades.
Seed Investing, which I do for a living, is much different when it comes to best practices. There are no boundaries for how businesses can grow in a global, mobile, social connected world.
I follow smart people, grow my network, build a thesis, deepen my domain experience (and in my case strong opinions about certain industries) and find founders doing things that get me excited about the future.
Unlike the stock market, there is no Wall Street to set prices.
Of course if a company gets big enough and does not get acquired you have to make selling decisions – Lifelock, Tubemogul, Robinhood to name a few over the years.
In these cases there are no price targets just best practices. There is no perfect set of rules and best practices, just consistency of implementing rules and best practices.
Also published on Medium.