Strategy
MORE SERIAL PROBLEMS
But more than purchasing stocks at the wrong time of their lives is that the PM or analyst’s knowledge of the stock and its industry peaks with the original research and purchase. Using this serial process, the analyst or PM moves on to the next idea, with the just-purchased name settling in to the portfolio. And their knowledge understandably fades, as they can’t possibly keep up with every strategic and tactical move of their holdings. Pretty soon, the recent purchase joins virtually all their other holdings as a name for which something good happening is always just around the corner, but it gets harder and harder to remember what that good thing was going to be….a big contract win?…a competitor going under?..a management kitchen-sinking an old product line?…
And thus it is with the traditional serial process. Companies needlessly over-analyzed as they make their way into the portfolio and under-maintained and ever-more-poorly understood as they age within the portfolio. And all the while the companies themselves are fighting the good fight of middle-age.
But there is a superior way.