Let your winners ride

Extracted Attributes

• Key Principle

  Maximizing returns by holding high-performing assets or companies for compounding growth.

• Application Area

  Public Market Investing

• Counterpart Strategy

  Cut losses quickly

• Associated VC Concept

  Power law distribution (identifying 'power law winners')

• Associated VC Challenge

  J curve (illustrates long return cycles and initial losses in VC)

• Related Behavioral Bias

  Disposition effect (tendency to sell winners too early and hold losers too long)

• Proponent (Public Markets)

  Peter Lynch (associated with 'tenbaggers')

Timeline

• The strategy has been a long-standing principle in investing, notably advocated by figures like Peter Lynch, who emphasized holding 'tenbaggers' to capitalize on significant growth. (Source: Web Search)

  Undated (Historical Principle)

• The concept was discussed on the All-In Podcast by hosts Jason Calacanis, Chamath Palihapitiya, David Sacks, and David Friedberg, in the context of whether the Venture Capital model is broken, emphasizing its importance for generating massive, compounding returns. (Source: d21d43bf-4b55-4adb-9584-8c298d6baf45)

  Undated (Contemporary Discussion)

The Challenge: Ride or Dies

The Challenge: Ride or Dies is the thirty-eighth season of the MTV reality competition series The Challenge, featuring alumni from The Real World, Road Rules, The Challenge, Are You the One?, Big Brother, Ex on the Beach, Survivor (Turkey and U.S.), Love Island (UK and U.S.), Ultimate Beastmaster, Prince Charming, The Mole Germany, Beauty & The Nerd and Exatlón Estados Unidos competing for a share at a $1 million prize. The season premiered on October 12, 2022, preceded by a launch special titled "Ready to Ride" which aired on October 10, 2022.

Web Search Results

• Techniques for Managing Positions - Fidelity Investments

  In my opinion, one of the simplest, oldest methods, and most effective ways to help lock in profits and let your winners ride, especially with lower-priced, smaller-cap stocks, is to sell half on a double. This way you take your initial investment off the table and you let your winnings ride. Or you can use a slightly more conservative approach. In order to keep it simple and since it is different for everyone commissions, fees and taxes are not considered in the following example. When a stock [...] your losses fast and letting your winners ride. [...] On the flip side we emotional humans are inclined to take any quick profits and sell any stock that delivers a gain right away. The more prudent course of action one may want to consider is to sell losers quickly and hang on to winners as long as they keep winning. ### A lesson in market psychology

• Ride your winners Cut your losers - Weekend Investing

  The goal is to cut losses quickly and let your winning stocks grow . Let Winners Run and Cut Losers Short. One of the biggest mistakes investors make is selling winners too early and holding onto losers for too long. If a stock is performing well, allow it to rise further.

• 10 Tips for Successful Long-Term Investing - Investopedia

  It’s important to invest based on future potential versus past performance. ### Tip A company's potential for growth matters more than its past performance for its stock price. ## 8. Sell the Losers and Let the Winners Ride One of the most challenging aspects of investing is knowing when to sell. Many investors do exactly the wrong thing: They sell their winners too early while hanging onto losing investments, hoping they'll bounce back. [...] Peter Lynch made much of his fortune by identifying stocks that became "tenbaggers"—investments that increased 10 times in value. But capitalizing on these rare winners required the discipline to hold onto them even after they had doubled or tripled, as long as the company's growth potential remained strong. ### Tip The key is evaluating each investment on its own merits rather than using arbitrary rules like "sell after a 20% gain." [...] It's best to avoid the "get in, get out" mentality of quickly trying to profit from trades. If you've done your research and found a solid stock that continues to be a good investment, holding onto it for the long term should bring profits.

• Let Your Profits Run: Overview, History, Example

  The flipside of letting profits run is to cut losses early. The way to make money as a trader, according to many, is to follow both of these pieces of advice: to let winners (profits) run their course, and to cut losing bets before they spiral into deep losses. ### Key Takeaways ## Understanding Let Your Profits Run [...] The disposition effect in behavioral finance describes a type of loss aversion whereby traders hang on to their losers for too long and sell their winners too early. This psychological bias, where losses loom larger than gains, can be detrimental. Letting profits run and cutting losses is the better and more rational strategy - but psychologically more difficult to execute in practice. Driehaus Center for Behavioral Finance. "Behavioral Finance Body of Knowledge." Page 3. [...] You should typically only sell a winning position if the price has risen to your target or to where fundamentals support. If fundamentals do not support a rally or it has reached or exceeded your target price, by all means, sell. Otherwise, people tend to sell their winners too early. To avoid selling too early, you should hang on until some objective (and not emotional or psychological) price level is reached. ### What If Things Change and My Target Price Is Revised Lower?

• A Winning Investment Strategy Sitting Right Under Your Nose (If You ...

  As I mentioned, this is a hard strategy to love. It buys the market’s rejects at their (almost literal) nadir. Also, it’s go-anywhere, meaning it invests in stocks of any size or style, defying easy classification, and lets its biggest winners run, leaving the portfolio top-heavy (Nvidia was a 13% weight in the 70%+ Drawdown portfolio by the end). All that would make it a tough sell—one that most fund companies wouldn’t bother to pursue. Reason 2: Tests Patience [...] To be sure, this is not a painless approach. You’re bellying up to buy stocks, sometimes _numerous_ stocks, beset by doubts about their prospects, knowing full well that many will have dismal results. Also, the strategy does require some maintenance—because so many of the stocks end up being acquired, an investor would want to redirect the proceeds to existing holdings, essentially feeding the relatively few big winners to ensure they more-than-offset the many losers. [...] With that in mind, I built five hypothetical strategies that did variations of that very thing—they bought stocks right after they’d experienced a loss of at least 50% and then left them more-or-less untouched from there. (For a fuller explanation of how I built these hypos, see the Appendix section.) Those strategies include the following: