Taking Profits the Wrong Way

and the Pareto Way

I saw this headline from an anonymous analyst on SeekingAlpha.com

Isn’t there a saying that there is never a bad time to take profits?

Yes, but that’s a low state. And it will get you into serious trouble.

Especially if that logic will also get you into other stocks that are falling like a knife,

that may not bounce back.

Looking at Sirius over the past 5 years, it was only around $20, which I assume he paid.

Given the risk he took, I would argue you'd better hold this for a long while, or you should be trading SanDisk and Micron.

When you see headlines like this, it may be a time to open a position as opposed to just scooping up the first profit you see.

There is a concept I recently learned, known as the Pareto Principle, which holds that 80% of your profits come from 20% of your portfolio.

This aligns with good logic: the more your insight and habits are aligned with the market, the more you still need to have the popcorn pop. And not all of them do.

Whoever bought SIRI at the lows may have been very wise, but if you close out your trade, you’ll never know.

What are your thoughts on success in a portfolio?