You can catch a lot of stinkers this way, especially if you come to a position late like I did with $DMTK and $BIGC, and Drowsy did with $ATER and $SKLZ (we both could list many more examples). When you realize you made a mistake, just get out (or like Drowsy, just hold forever 😊).
Sometimes you catch a company at just the right time, and it takes off. Then the hard part is deciding to hold, add, or take profits. Drowsy and I both have examples of each in our portfolio’s.
$UPST is a great example of a company we both bought right before the latest run (under $100). When it stalled at $200, I was sure it would pull back and wasn’t willing to give back a 100% gain in such a short timeframe. Drowsy, being much smarter than I, is now another 100% richer as it trades near $400.
Remember, with this strategy, you have to continue your due diligence and build out your position. You may have crushed it with your initial buy, but it doesn’t help the bottom line much if it’s just a tiny allocation that’s gone up a lot.