Plato's Prefs

When to sell:
1. Nobel Econ. Prize winner Prof. Modigliani's advice: "SELL TOO EARLY."
2. Ronald Baron of Baron Capital Group, in his 2001 annual report: "Don't forget to sell."
3. "I should have sold the company then," Dr. Elkins (founder and now ex-chief executive of liquidated Integrated Health Services Inc., formerly one of the US's largest nursing-home chains) said on a hot day, while sipping a cold drink at the Ritz-Carlton near his Naples mansion (in 2002). "We were (then in 1998) the darlings of everybody."

In General:
1. Follow Stanley Druckenmiller's advice: "(W)atch your own net worth every day", rather than rely on fancy professional risk management models, esp. the VAR (value-at-risk) model. Do not abandon your money to others. Take a keen interest.
2. Dr Gut (Jan 2005): Think small. Buy a small parcel. If it works, top up. If it tanks, average out. [This only applies to the shares of solid companies.] Realise small profits, unless the company has macroeconomic relevance. This way you tend to prevent that gambling instinct taking over which at some stage is going to risk it all.
3. Dr Gut (June 2006): Accumulate cash (profits) from judicious selling during the year so that during fire-sales, that may only come around once every seven (corrected from 'five', Oct 24, 2008) years, you can top up.
4 Dr Gut (August 2009): Selling makes money and preserves capital when the investment is in the black.

Caution 1: Diversify, diversify, diversify
On Tuesday, May 21, 2002: "Amerindo Fund's Investors Are Its Manager's Latest Charity Case"
By BRIDGET O'BRIAN and AARON LUCCHETTI Staff Reporters of THE WALL STREET JOURNAL
"Money manager Alberto Vilar made a fortune for himself and many of his clients in the 1990s with big bets on technology stocks. He has spent the past three years giving away a chunk of his personal money to charity. Some $50 million has been earmarked for Washington's Kennedy Center, about $40 million to New York's Metropolitan Opera, $20 million to New York University. In all, the 61-year-old president of Amerindo Investment Advisors has donated or pledged upward of $250 million since 1999, about half of it earmarked for opera, a longtime passion. But now, one needy group could use a little of Mr. Vilar's charity: his investment clients. With an average 37% annual loss in the three years through April 30, Amerindo Technology Fund has performed worse than all but two of some 4,900 mutual funds tracked by Morningstar Inc. Investment returns of Amerindo's Health & Biotechnology and Internet B2B funds, both started just as the technology bubble burst in 2000, have fallen since their inception and the portfolios have failed to gather significant assets. Meanwhile, Amerindo's main clients -- big institutional investors such as pension funds and university endowments -- also have taken a beating. In February 2000, the Oklahoma Firefighters' Pension & Retirement System invested $54 million with Amerindo. By September 2001, the investment had dwindled to $9 million and the pension fund, with a total $1.2 billion under management, pulled the plug on Amerindo. "We got in at absolutely the worst time," says Robert Jones, the pension fund's executive director. "The lack of diversification was just punishing," he says.

Platonists not only diversify their holdings, and practice "asset allocation", but also diversify their strategies.

Caution 2: The actions you take -- and the results you produce -- are completely dependent on how you see the facts. You can focus on the best in every situation or you can focus on the worst. There's a problem in every opportunity and an opportunity in every problem. Interpret the facts negatively and you're left with little power and fewer opportunities. Change your point of view and you're empowered to create the best results possible -- no matter the circumstance.

Caution 3: When you have decided on a tactic - say to go long - think contrary. Wait for a low. When you want to short, wait for a high. So, when you see a target in a Pref, think contrariwise before getting in.

Caution 4: A directional target (D/T) , (as in the Alsi-Near Letter and FuturesPrefs) is a DIRECTION(al target) first and then thereafter a target.