I love to do Twitter Q&A’s at least once a week. I take 15-30 minutes and let people ask me anything.
It never fails that someone asks me:
1. My favorite stock (or 3 or 5 stocks) to hold forever
2. My favorite stock for the next year
I never answer the question.
I have tons of ideas, but no BEST idea. I have a portfolio that I am constantly adjusting with new ideas and the trimming of my worst ideas.
My biggest single stock position continues to be Apple, but I don’t think it’s my best idea. Many years it has been my best performing stock and looking back it has probably been my best public stock idea of the last 15 years, but tomorrow it could start to go sideways for three years and/or drop thirty percent. If it dropped thirty percent next week, I would likely buy more, but if I called it my best idea the week before, how would that help you today?
The banks don’t feel the same way. They blast out their ‘best ideas’ all the time.
There are NO bank analysts that will…after months of research putting together their ‘BEST IDEA’, put aside fifty pages of research and months of work, if the stock implodes the next day or month, with a one liner that says…’I am a putz, my best idea was a turd so please burn my research and get the hell away from my best idea…now’.
It does not happen and will not happen. It is too hard for an analyst to change their mind quickly after all that work is done.
This year JP Morgan has had a lot of BEST ideas.
On January 1, Facebook was one of their BEST ideas. It’s now down 20 percent on the year.
In September, YELP was added as a BEST idea and it is down 30 percent since.
They no doubt have had some good, even great ideas. That is their job.
I would love it if JP Morgan did some mea culpa’s and openly followed up and talked about their WORST IDEAS once in a while. We would all learn more and I might just trust them.
I am wrong all the time. It is painful. It is worse when I actually have shared the idea.
I come clean here when my ideas shared here go wrong. It is amazing how forgiving people are and more importantly how much better my investing has gotten.
Long story short…ask people what their worst idea is/was. If they answer it, you can trust them a little bit more.
Also published on Medium.