Two of my favorite techniques in investing are dollar cost averaging (when buying and selling) and rebalancing.
In public stocks and other marketable assets, these techniques (averaging in and out) are particularly important. I believe you can spot a long term trend and ride it. But I do not believe you can spot a market bottom or top until it is in the rear view mirror. So that is why I like to average into and out of a position over time.
Rebalancing is even more important. If you have a position that has worked incredibly well and it starts to become a very large portion of your overall portfolio, it is wise to take some of that position off the table and reinvest it in other attractive assets. This gives you more diversification, which I believe is generally a good thing, and also de-risks your portfolio from a big selloff in the largest position.
Rebalancing – AVC, May 10, 2017, at 12:09 PM
ModCloth was founded in Pittsburgh, but later moved its HQ to San Francisco. It’s impossible to know if things would have worked out differently had the company remained in the Steel City, but some of its quirky retail culture did seem to get commingled with the “grow grow” tech etho
Using Debt Like Growth Equity – AVC, April 24, 2017, at 10:13 AM
The rule of thumb when it comes to fat protocol investing is this:
“The market cap of the protocol always grows faster than the combined value of the applications built on top”
Joel Monegro, in Bitcoin doesn’t care what Silicon Valley thinks, January 7, 2017 at 07:49PM
Most people think that VC is all about the initial portfolio construction, selecting the companies to invest in.
…the other half. That includes actively managing the portfolio (board work, adding value, etc), it includes allocating capital to the portfolio in follow-on rounds, and it includes working to get exits. And it is that second part that is the harder part to learn how to do.
Reserves – AVC, January 8, 2017 at 01:49PM