A recent blog post, here, by Eric Crittenden at Longboard Funds has been making the rounds for the past week and rightfully so. To summarize in a sentence, 20% of all stocks (14,455) from 1989-2015 are responsible for all the gains, which obviously means, 80% of all those stocks have given investors zero return. This is a staggering statistic and raises the question, how do you gain exposure to only the 20% or do you even try?
Whether you try or not, it’s our belief that it must be done systematically and as Ben Carlson points out in a blog post here, you have to cut your losses and let your winners run.
Below is an appropriate quote about winning and losing stocks and comes from Stanley Drunkenmiller when speaking about George Soros:
“I’ve learned many things from him, but perhaps the most significant is that it’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.”