Too much of one thing can ruin the whole thing.

A chef must be mindful of the ingredients s/he uses so as to not overpower the dish with any one flavor. A weightlifter mustn’t overtrain any one body part. A healthy diet includes various food groups. An architect doesn’t design a house specifically for beauty, safety or practicality but considers all three.

Obsessing over one thing weakens the product. Over-optimization makes it vulnerable in the long-term.

Professional sports teams consistently curate their rosters — who stays, who goes, who gets more playing time and who gets benched. The challenge is finding the right balance of skill and grit; the right mix of players to get you to the playoffs and those to get you through. Year after year, we see many teams achieve stellar regular-season results via optimizing a specific position, player or approach. But inevitably, they fall to the more robust well-rounded team without any glaring weaknesses.

The same goes for investment portfolios. Overly investing in one asset exposes it to heavy losses when the market environment changes. Both buy-and-hold’ers and fundamentals-based long-only investors are learning this hard lesson right now.

We must make room for new opportunities to carry us to success. In the markets, ditch the dogs for stronger trending assets. Remove that old dated painting from your wall. It doesn’t do it for you anymore. You know it, so just do it. It’s OK to get rid of it for a while and see what your mind fills it with. The void makes room for something better to take its place.

In fact, when you hold onto old negative-return investments and goods, you lose the muscle to browse and search and the ability to spot new profit opportunities.

Do I need to state that this is a key skill in the markets (and in life)?

For a real-life recent example, copper and other base metals (aluminum, tin, lead, etc) began stagnating. Holding a long position was no longer producing profits. An astute opportunist recognized that it became more beneficial to kick the base metals to the curb in favor of, say, holding short positions in bonds and perhaps stocks; and perhaps long positions in agricultural commodities, energies and the U.S. Dollar.

The point is that there were better opportunities elsewhere.


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Jet engines work best when they’re open at both ends. They take in air and spit it out; a key function to keeping the plane in the air. A portfolio cannot grow when gathers too much mass. Eventually, there’s no capital left to allocate to new better-performing instruments.

Currently, there’s most likely a lot of dead weight in your portfolio. Take a look. Do and inventory of your holdings. Ask yourself why you’re still holding a handful of sludge stocks dragging your entire portfolio down. Most likely, your answer is rooted in hope and/or laziness. Both are going to keep you from long-term success.

Make room, will you please.

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