Being a private investor managing my own portfolio, I don’t have any rules or restrictions that are imposed by regulation 28 or a collective investment scheme.
I have to work out my own rules or just let the portfolio run wild. I try to do the former with as little fiddling as possible.
The key? I keep a clear focus on why I bought a stock and let that inform me as to when I should sell. Let’s take Dell as a recent example. In February, Alphabet results got me thinking about servers as much as fancy chips for data centres, as CEO Sundar Pichai spent a fair bit of time during the results call talking about the replacement cycle of servers.
After doing some digging, a few stocks came up; the most notable was Dell. I set AI on the case, using the recently launched Anthropic investment skills, asking for a sector report. The report was impressive and confirmed that Dell was the best-placed stock for server demand.
I bought some just ahead of results at a little over $120. The results were great; US President Donald Trump pumped the stock and before I could really work out what was happening, it was at almost $600.
So now what? A position is suddenly five times in size and now fairly dominant in my portfolio.
I went back to the notes I had made ahead of buying. There were three things I liked about the stock. Dell was a sleeper part of the AI build-out and was not yet noticed by the market. The second was the likelihood of better-than-expected results and, third and most important, a cheap valuation.
My key consideration was that it was not a “death do us part” stock, but a “remember to take the money and run” one. This is a important: it is far too easy to think we are smart and that this is only early days and that another five times in the next six months is possible.
That may be true, but in a volatile, stretched part of the market (hyped tech AI spend), I have plenty of exposure. So let’s take some profits. I sold half of the holding and have put a stop loss and a take profit on the remaining half.
From the half I sold, I have a tax bill and also the important question of what to do with the money. This is all part of portfolio management.
I am now moving further down the tech chain to robotics. Not the humanoid types being bandied around right now. They’re not solving any real-world problems, and I think the humanoid shape is just wrong for robots.
The real production robots are those that run around in an Amazon warehouse — Amazon already has more than 1-million robots in its warehouses. CEO Andy Jassy says they’re the future of the warehouse workforce and expects to use more, driving down staffing costs.
They, of course, also have Amazon Web Services, which puts them on the server side of the AI build-out. Yet unlike many other AI stocks, this one is not expensive.
I have my notes, and we’ll see how this works.
