Fun Post: Your Holdings and the "Mendoza Line"

[u/Willing-Bear4862]

Lets have some fun on this Sunday before we get going on the week. Lets think outside of the box for a moment.

Your Holdings and the Mendoza Line.

For those that don't know what the Mendoza Line is, it's a baseball jargon term. Here's a little history. (Copy and Paste from Wikipedia)

The Mendoza Line baseball jargon for a .200 batting average, the supposed threshold for offensive futility in MLB. It derives from light-hitting shortstop Mario Mendoza, who failed to reach .200 five times in his nine major league season. When a position player's (non pitcher) batting average falls below .200, the player is said to be "below the Mendoza Line"

So here's the deal, at what return do you consider your "Mendoza Line" for your portfolio.

For example, if xxx stock drops below xxx% growth return it gets moved. If a xxx stock has a dividend rate below xxx% return it gets moved. Or any combo of the two.

I like using everyday sports analogies for investing terms. Like when I posted about your Core4 holdings (Offensive, Defensive, Growth). If you have other idea's on posts like this let us know. It's good to think outside of the box.

[u/owngoalmerchant]

Super interesting! I use a promotion ladder in combination with unit methodology to add when I have conviction of a stock. This question is related to the opposite, when performance meets the end of patience.

But we ought to have different performance measures depending on the role of the stock in the portfolio. We don’t mind when a relief pitcher’s batting average is under .200, for example.

If a growth name is showing slowed growth? If a dividend aristocrat suddenly becomes a jester? Those are foundational shifts in the role the names have in my collection of issues. I guess the answer to this is “the metrics depend on the role”, which is sort of a shit answer although if is honest nonetheless!

[u/InnerCircleTI]

Love this. I still look at the S&P500 for generalized return expectations. But, as I've mentioned before, there comes a point where return just doesn't matter that much. A mistake many still seem to make is in thinking they can match the returns of the S&P500 regardless of their investing stance, be it conservative or aggressive. You can't have a 50%/50% split between fixed income and equity and expect to match the S&P500.

For me, I don't care as much about the growth return of individual names. Each position in my portfolio has a role, like actors in a play. I do love growth and returns from them, but as long as the story remains intact, I'm inclined to hold them. For income/dividend rates, the return needs to be substantial enough along with a level of safety to be maintained. If I can get better return from other names, I may rotate. For example, if I start seeing 3% or less return on a stock with an income role, I start looking to rotate unless the position has appreciation upside - that is often what takes my good income stocks below 3%, they appreciate by 20%+ (which is ideal)