This is the time of year that I like to look hard at my investments and think about my commitments to stock that I’m currently holding. In most cases, when I first discovered a great company worthy of investing in, I didn’t have enough money to accumulate a large position. What I would usually do is start buying odd lots and then add to those positions over time as I became convinced that the initial buy was a good idea.
I’ll spend a lot of time this month looking at my investments and deciding which ones have done well and evolved as I had expected them to when I first started to accumulate them and which ones haven’t. The easiest targets for elimination are the odd lot positions. If I have a stock position in a company that I haven’t added to since the initial buy, that position is ripe for disposal. It may be a good stock to own but since I haven’t added to that position, I must have found better positions during the year to invest in. This is a sign that my limited funds should be redeployed into the better positions.
As most ranchers will tell you, I’m simply culling the herd. I may like all the positions I own but I can’t own everything. I need to put my limited funds where the best returns are, and that means consolidating my positions. I don’t have an upper limit on the number of individual positions I have, I just want the positions that I own to be productive. So as I look out into the new year I want to be invested in the best companies I can find that will increase in value and distribute an increasing amount of dividends.
Because next year I’m going to find a whole new set of great companies that I want to invest in. Sometimes I feel like a kid in a candy store. You just have to love American Capitalism.