As a starving grad student in Rome, I learned a lot of great things, like paragraph-length insults so beautiful to hear that you can hardly believe their utterance is good cause for a knife fight. Among the more useful pieces of Roman folk wisdom was this little gem: "I know my chickens."
It's a phrase used to indicate intimate knowledge of someone or something. Ask me why I set that wheel of Brie on top of the fridge before running out to grab the mail, and I'll point to my cheese-thieving dog and tell you, "I know my chickens."
As an investor, you've got a portfolio full of chickens, and it should be your goal to understand their every scratch and peck. It's not just a matter of continuing to evaluate whether your current investments are in good businesses. Getting to know your chickens well is always time well spent in the never-ending search for stocks in which to invest new money.
When I look back at my investing gains this year, I find that a major portion has come from increasing my positions in companies I already knew very well. Sometimes I invested after the stock tanked, and other times, I added to a proven winner.
To take a pretty extreme example of one I completely missed, although it was strutting around right under all our noses, I had to look no further than Motley Fool Stock Advisor pick Netflix
I missed out on that bird because I wasn't paying close enough attention, but I did a lot better with technical ceramics maker Ceradyne
Ditto my current assessment of Motley Fool Hidden Gems pick Faro Technologies
Knowing your chickens isn't about being right 100% of the time. It's about being less wrong than the rest of the crowd, being wrong less often, and being in a position to profit when those who aren't in the know turn tail and flutter away.
For more bird-brained Foolishness, peck here:
Here at The Motley Fool, we make it our practice to know our chickens. That's why our market-beating newsletters feature dedicated message boards, along with periodic reviews. A free trial is just a click away.
Seth Jayson loves his chickens, even though they can do some real damage with those sharp little beaks. At the time of publication, he had shares of Ceradyne and Faro but no position in any other firm mentioned. View his stock holdings and Fool profile here. Fool rules are here.