$100K Lock Box portfolio.
by Bob | May 14, 2021 8:43 pm
What is the $100K Lock Box[1] portfolio.
Endnotes:
- $100K Lock Box: https://www.stockgumshoe.com/tag/100k-lock-box/
Source URL: https://www.stockgumshoe.com/2021/05/microblog-100k-lock-box-portfolio/
A new small cap growth portfolio I’m building, 20 stocks in which I’ll invest $5,000 each, with a five-year lockup for each position.
Five stocks are in the portfolio so far, they’re listed below the main holdings on the Real Money Portfolio page — I’m planning to separate them out for clarity in the future, so far most of the stocks (4 out of 5) are also positions I hold in my main portfolio.
Can someone tell me why the $100k lock box is locked for 5 years? Or any amount of time for that matter. I’m sure there is a good reason but I haven’t uncovered any explanation in my search.
It’s a psychological tool — it means you need a high degree of comfort to buy, and know in advance that you won’t be selling even if the news looks bleak at some point. As it almost always does for even great growth stocks, from time to time.
Aiming for exceptional returns in small-cap growth stocks means you can’t sell just because it goes up by 100% or down by 50%. If you overreact to such moves, you can’t get to 1,000%.
Planning to hold for the long term is great, but sometimes not specific enough — that plan is often shaken by emotional reactions to headlines or sharp movements in the share price.
Committing to hold for five years makes it more specific, there’s a date and a promise and therefore there’s no need to worry about what happens in the short term, so you can actually stick with the plan.
Doesn’t mean it will work, of course, or that this particular strategy is appropriate for everyone. I’ll let you know in five years how it works for me.
I cannot find any discussion on the reason the lock box is locked. I’m sure there is a good one but would someone mind clueing me in?
I am doing a mirror of the LockBox Project, but with slightly different rules for myself:
– Still no selling;
– Slightly smaller position sizes;
– and I am happily nibbling aweigh, this week!