The Fly’s New Rules

For the past 4 years, I’ve been winging it, using “artistic” license to balance out portfolios the way I deemed fit. After all, I am a genius and what could go wrong?

Since my comeuppance, I’ve implemented a series of rules that must be adhered to, dated until I make back all of my losses–which should take about a year.

For example: 40% of my holdings must be earmarked for conservative, long term, positions. Frankly, the word “long term” only means until they stop working higher. I am cutting losses at 5-10% from basis.

Another 40% go towards my GARP strategy (growth at a reasonable price). And, lastly, 20% go towards the sewers, craps shots in the dark, vagrant securities without a hope in the world, if only for a brief period of momentum. For the time being, leverage has been ruled out.

In the past, I’d toss positions around carelessly, uninterested about my prints and I’d oversize XYZ straight out of the gates, like some savage animal out in a field of garbage. But now, the more refined tea drinking Fly exercises a bit of discretion when buying securities. Although I still rip out offers like Sub Zero rips out spines, I size them at 5-8%, 8-12% and 12-20% of holdings–staggered over a number of days. In the case of XON, for example, I started off at 8% of holdings, upped it to 12% of holdings a few days later, then finally super-sized it to 20%, after my urinal shadows had a sit down with me and told me “the fucking stock, see, is heading higher, now” (Edward G. Robinson voice). Post victory, I dialed the position down over two days to 10%, then finally back down to 6% of holdings, where I intend to hold it indefinitely.

In the case of JAZZ, SLCA and now TEDU, all three positions are between 10-15% of holdings.

These are my new rules, ones that must be adhered to and respected, if I am to walk my way back up the boulevard of dignity– without throwing myself into lit fireplaces along the way. I am sure there will be a time and place for unchecked hedonism again, a time when “The Fly” might throw a glass of beer on his monitor and buy ten million dollars worth of stock because of dream that I had the night before. But times are tough now and we must comport ourselves like good stewards of coin, respecting the labor that went into acquiring said coin.

Amen.

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