Friday File: “Trophy Assets”

Answering a reader question about some REITs, plus a few other quick updates
P.S. Stock Gumshoe will be mostly closed for two weeks... expect your next Friday File on July 26.

I’m off to spend a couple weeks walking in the woods with Mrs. Gumshoe and the Little Gumshoes (though they’d probably want me to note that they aren’t so little these days), so we won’t have much in the way of new content at Stock Gumshoe for the next two weeks, and the next Friday File won’t come until July 26.

I also don’t expect to do any trading in the next couple weeks, and I didn’t make any changes to the Real Money Portfolio this week beyond covering my Akerna (KERN) short and selling most of the associated warrant position. (If you’re curious about the details, by the way, I was short KERN because I expect the stock to get to $10-12 once the float increases with insiders freed up for selling… and I covered in the $15s, before it got to my target, because the cost to borrow increased from 50-100% to about 300%, meaning it would cost more than 1% a day to hold the position. I held a small portion of the warrants as a “just in case it takes off” speculation, but sold most of the rest… one of the nice (and rare) trades where both the main position and the hedge are profitable.

That inactivity I’ll be facing in the next couple weeks is a little emotionally challenging for someone who is accustomed to reading about and monitoring dozens of stocks every day, particularly during volatile times like these, but over the longer term I imagine my little vacation will be good for the portfolio… the biggest impediment to long-term results, after all, is short term activity. The more you buy and sell, the more likely you are to screw things up.

I admire the patience of Warren Buffett, who has always said that you shouldn’t own a stock for ten minutes that you wouldn’t own for ten years… and that you should focus on owning companies that you’d be happy to hold if the market closed for a few months and you were stuck not knowing what the “price” might be for a long time. But one reason Buffett and Munger have done so well, beyond their obvious skill in identifying the right investments to make over time, is that this stubbornly patient mindset is really hard to maintain. Hopefully I’ll become stronger and wiser by (mostly) ignoring my portfolio ...

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