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| red sox 777 08/15/20 10:24:34 AM #476: | Also note that good portfolio allocation would have signaled to you to sell a significant amount of AVCT shares at $12. Why? If 50% was a good allocation for AVCT shares at $4 based on a price target of $20, then at $12 50% is no longer a good allocation. That's because your expected remaining gain from $12 to 20 is only 5/3x instead of 5x from $4. It'd be quite reasonable to cut the allocation from 50% down to say, 25%. So you sell half your shares. This is what Lopen does when his longshot stocks moon and it's generally a good strategy. It doesn't mean you are using money management gambling strategies (which don't work), it just means the situation has changed - the situation HAS in fact changed because the price went up. --- September 1, 2003; November 4, 2007; September 2, 2013 Congratulations to DP Oblivion in the Guru Contest! ... Copied to Clipboard! |
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