Robert Kirby, a professional manager whose heyday was in the 1970s and 1980s, once wrote an article titled “The Coffee Can Portfolio” which focused on the importance of letting winners run as the most important yet chronically neglected component of finding investment success.
When Kirby presented the concept, he told the story about a lady whose money he managed. Specifically, after her husband died, she transferred the assets from her deceased husband to Kirby.
When Kirby reviewed the husband’s portfolio, he noticed that he had tracked the same exact investments that were made in the wife’s account, except there was one exception: the husband never sold any of the stocks when Kirby did–he just let them all run and achieve whatever compounding it was that they generated.
Upon comparing the results, Kirby had two observations: (1) the portfolio was dramatically skewed, with just four or five stocks making … Read the rest of this article!