In their latest Master Series at Investment Masters Class, David Rolfe discusses a number of topics including not selling stocks because of valuations, and paying up a bit for growth. Here’s an excerpt from the interview:
And so what we’ve done over the last number of years is we have not been as steadfast to sell a stock outright because of valuations, we’ve been slower to trim it and conversely pay up a bit and build positions more slowly too. That said, we’ve maintained the discipline to sell even the best of businesses when valuations get absurd. Such was the case of our sale on NVIDIA last September.
When you look at the current valuation of our portfolio, if somebody were to have a crystal ball and they were to show me today the valuation, say, on a trailing or forward basis, if you would show me what the valuation is today, say, 10 years ago, certainly 15 years ago, I would have thought I’d gone mad.
But I think that’s been a rational, intelligent adjustment to make. Let’s face it, growth companies tend to be longer duration assets. Interest rates get lower, the valuation gets higher. We’ve learned or adjusted to the environment. Of course, the catch is that we all know if Powell & Company announce on morning, ‘no more QE’ we all know what would happen to the stock market. It would be October 19th, 1987, The Sequel.”
You can read the entire discussion here:
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