Hi Partner 👋
This is Part III of our extensive Portfolio Update:
Part I: Showing why we expect a return of 17-18% per year going forward
Part II: Go over every single stock in Our Portfolio + Potential switches
Part III (today): making a switch in Our Portfolio
We will sell a company that is struggling right now.
And we will buy a company with an expected return of 22% (!) per year.
Position Switch
Today, it’s time to make a position switch.
A few more will probably follow going forward.
You are looking for the reasoning about why we are making some changes? Please read this article.
We will sell one company and use the proceeds to buy more of an amazing company we already own.
I’m sorry... I f*cked up
When I am making a Portfolio change, the first thing I should do is apologize to you.
Why?
There is one major reason why we are selling a stock: the investment case is no longer intact.
Because when the stock would still do well, there would be no reason to make a change.
The only valid reason to sell a quality stock?
One of the most wonderful companies in the world?
When you notice you were wrong.
The investment thesis is no longer intact and the company is losing (some of) its moat.
Today it’s time to sell a stock in Our Portfolio as I think there are better opportunities elsewhere.
And that’s why I want to apologize to you.
I made a mistake and I’m taking full responsibility for it.
Unfortunately, making mistakes is part of the game.
We should always keep the rule of three from François Rochon in mind:
One year out of three, the stock market will go down at least 10%
One stock out of three that we buy will be a disappointment
One year out of three, we will underperform the index
As Peter Lynch said:
However, this doesn’t mean I don’t feel bad about this.
I feel personally responsible.
That’s why I will try to share the key leanings with you.
Here’s what we’ll do:
We are selling one company
We are using the proceeds to add to another company with more upside potential
Let’s dive into the company names.