There is Always a Bear Case

Yesterday I was reading an article about one of the stocks we own. It was generally a favorable article. It drew several comments including a long-ish one laying out something of a bear case for the stock. The comment was articulate and possibly compelling.

The name of the stock is not relevant but like many of the stocks we own, we have held it for years and coincidentally it has been an outstanding longterm performer; one of our best holds.

As I continue to monitor the stock and what is going on for the company from the top down in markets it sells into, from the bottom up and thematic factors the conclusion I draw is that the positives continue to far outweigh the negatives. I have felt this way about the name for a long time, it continues to be correct, at some point the story may change and hopefully I will catch such a change.

If you use narrower holdings in your portfolio, either country funds, sector funds, niche funds or individual stocks, there is some amount of monitoring you must do. No matter how much work you do here there will always be holders who know the story better than you and other holders who know far less than you.

Only reading things that support your side of the trade is clearly not a great idea but allowing yourself to be overly influenced by one article about something that you've spent a lot of time studying is not great either. If an article causes you to wonder if you've missed something and sends you back to re-learn a story or reorient to the thesis for owning the stock or fund then I think that is a positive.

The bigger point is one of emotion and insecurity. It may seem obvious but one article does not necessarily invalidate a thesis for owning a particular stock. There is a well reasoned bear case for everything in your portfolio. Well reasoned bear case is not necessarily the correct case. Even King Apple has threats to further prosperity. The threats may not play out anytime soon or ever matter but they exist. Of course threats to Apple could be correct and play out soon. If it is a name you own, then it is up to you to keep tabs and decide based on a reasonably sized sample of inputs not just one article.