Module 3: Execution & Long-Term Growth

Your Biggest Enemy is You

Most investors fail not because they pick the wrong stocks, but because they have the wrong temperament. They buy high (when everyone is excited) and sell low (when everyone is panicking). Your psychology is more important than your intellect.

• Be Patient: Wealth is built slowly. Don't check your stocks every day.
• Be Fearful When Others Are Greedy: When prices are at all-time highs, be cautious.
• Be Greedy When Others Are Fearful: When the market crashes, that is your single greatest opportunity to buy the great businesses you've been watching.

Portfolio Construction

1. Diversification: The 10/10/10 Rule

You should never put all your eggs in one basket. But you also shouldn't have so many baskets that you can't watch them.

• Own 10-15 Companies: This is a manageable number to follow closely.
• No More Than 10% in One Stock: Don't let a single company wipe you out if it fails.
• No More Than 10% in One Sector (at cost): Avoid being over-exposed to a single industry (e.g., all tech or all banks).

2. Position Sizing

When you find a great company at a fantastic price, you should buy a full position (e.g., 5-10% of your portfolio). If it's a good company at a fair price, maybe you start with a smaller 2-3% position. Let your conviction (backed by your valuation) determine your size.

3. When to Sell?

This is the hardest part. The TMT philosophy is to sell only when one of these is true:

1. The Price is Extremely Overvalued: The stock price has run up so high that it no longer makes sense, and you can find better value elsewhere.
2. The Business Fundamentals Change: Your original reason for buying is broken. A new competitor has destroyed their "moat," or new management is making bad decisions.
3. You Find a Dramatically Better Opportunity: You found a different stock with a much higher potential return, and you need the cash.

We *never* sell just because the price went down. If the business is still great, a price drop is a *buying* opportunity, not a selling one.