Find Your Investing "Sweet Spot"

Investing is a marathon, not a sprint. It's a journey, not a destination. Investing is a process in which you constantly have to evaluate yourself and apply lessons you learn in order to become more and more successful over time. Most importantly, investing teaches you a lot about yourself as well.

The beauty of investing is that over the course of time you figure out exactly what your "sweet spot" is. I define "sweet spot" as being your absolute comfort level with your portfolio construction. When you hit your "sweet spot" you know it. You sleep better at night, you get excited every morning when you wake up to learn something new about the companies you are invested in, you feel like you are invisible to the markets because you are so focused only on your investments. Simply put, the "sweet spot" is a great place to be. But it is tough to get there. This process takes time.

For me, finding my "sweet spot" in the world of microcap investing luckily didn't take long. I have always been the most comfortable with my investments when I hold only a few, 3 or 4 at the most. When I swerve away from that bedrock principal of mine, I lose focus and I can feel stress levels become much higher and my clarity for all my investments becomes challenged. I have isolated this to being because it's near impossible to know everything about all your investments if you hold more than 3 or 4 companies in your portfolio...it's just too much. I would rather be an expert in understanding 3 or 4 companies, than be less of an expert in trying to understand 7 or 8. I love being highly concentrated in several companies as opposed to spread thin among many. While it is true that the more concentrated you are, the more risk you take, it is also true that the risks can be significantly mitigated by ensuring you conduct significant upfront and ongoing due diligence. 

With all the above said, I greatly deviated from my "sweet spot" in Q4 2015/Q1 2016 when I added several companies to my portfolio. I did it for what I thought was good reason as the TSX-V continued to plummet and the opportunities to pick up some companies at what I thought was a deep discount was incredibly attractive. However, picking up additional companies has caused me to greatly lose focus on the companies I feel have the most explosive potential in my portfolio. For months I have been operating outside of my "sweet spot"... and I need to find my way back. 

I will be trimming my portfolio down to 4 companies that I have the highest conviction in from the current 7. I started that process yesterday with one of my holdings, and I will continue to sell on strength for a few of my investments. I will keep you guys updated as to when a position is fully closed out. 

Remember, selling is ok. You don't have to hold stocks forever. But what is most important is that you do hold companies that you have your highest conviction in for as long as your investment thesis is intact, for that is the only way you will put yourself in a position to achieve 10-100x returns, or more, over a period of time.

So, what's your "sweet spot"? Let the discussion begin in the comments section below.