Over the past year, I have used Strawman to recreate my RL portfolio, to an extent. There are some companies which I have sold in RL but kept in the SM portfolio to see how they track along and if I made a bad call. One such example, unfortunately, is Wesfarmers. I am sitting on a roughly 50%pa gain for WES in SM. In real life, I sold out to take a modest gain shortly after purchasing. I believe the business is fantastic, but seems rather pricey. However, this is also what I thought long ago, and yet the share price…

This leads me to my question - what is everyone’s opinion on buying and selling businesses at arguably overpriced valuations? This question sort of applies to companies in general, so not necessarily just Wesfarmers here.

An issue that I am struggling with is trying to be a better long term thinker, whilst also having the capacity to see when a company might be overvalued, and potentially might need to be trimmed or sold out - because the offer is too good to refuse.

This debate currently takes place for me with Alcidion. A small holding - in RL I’m up about 30% because I traded in and out whereas with SM I’m down about 10% after doing nothing. I reckon Alcidion might not stick around these levels (maybe it will) but I now feel as though I should just hold it and continue along unless the thesis changes.

I suppose I am wondering what people’s thought processes are regarding their approach to holding a company and whether a particular approach should be taken depending on the fundamentals of each business or if I should generally leave things alone because I have the time factor to smooth it out.

in short, paying up for value is something I have realised is important. Sometimes, you just have to bite your tongue. But, is there a point where even cash becomes preferable if the valuation is too outstretched? What sort of leeway should be allowed between “this business will grow over the next few years” and “the growth might already be priced in here”? Overall, I know the two companies mentioned are world’s apart, but I find myself taking the same approach now - just leaving the position alone. Am I being too lazy? Should I be more vigilant and willing to take a profit if the company is smaller and less “proven”?

I reckon this is just something an investor needs to answer for themselves, but would love to hear any thoughts.

cheers