Portfolio Spotlight: Sell, hold, or hope? That is the question.

Every investor sooner or later finds herself in the same situation.

You buy a stock with a clear investment thesis, set a target price and a maximum acceptable loss. And then the market decides to move in exactly the opposite direction to what you expected.

I'm currently in exactly that situation with positions in The Trade Desk ($TTD), Salesforce ($CRM) and MercadoLibre ($MELI).

In all three cases I did not adhere to my own rule of cutting or closing the position after breaching the pre-set risk level. Those thresholds were $35 for TTD, $1,650 for MELI and $175 for CRM.

Instead of selling, I decided to wait for a potential recovery.

Was that the right decision? Only time will tell.

For The Trade Desk - $TTD the bearish scenario is primarily based on concerns about slowing growth and increasing competition. Digital advertising is a cyclical industry sensitive to economic developments, and investors also wonder whether artificial intelligence could eventually disrupt parts of the advertising ecosystem or put pressure on margins. After years of extraordinary growth, the market also expects almost flawless results.

On the other hand, the company remains one of the strongest independent players in programmatic advertising. Advertising on Connected TV continues to gain market share and The Trade Desk remains one of the main beneficiaries of this trend. If ad spending accelerates again and management continues to execute its strategy well, sentiment could change very quickly.

A similar situation applies to Salesforce - $CRM. The main concern is slowing growth. Salesforce has become a huge company, and sustaining high growth rates is increasingly difficult. A potential weakening of corporate IT budgets could further complicate matters.

Nevertheless, it remains a global leader in CRM systems, a company generating huge cash flow and one that has significantly improved its profitability in recent years. It is also investing heavily in AI integration. If these investments start to translate into revenue growth, investors may once again be willing to pay higher multiples for the stock.

For MercadoLibre - $MELI, the biggest risks are linked to Latin America. Currency fluctuations, inflation, political uncertainty or weaker consumer demand can negatively affect results in the short term. Moreover, after several years of strong growth, the market expected almost perfect results.

In my view, however, the long-term story remains intact. MercadoLibre continues to dominate e-commerce and digital payments across much of Latin America. The company benefits from strong network effects, growing adoption of fintech services and the ongoing digitalization of the region. If the company maintains a healthy growth pace, the current weakness may prove to be only a short-term episode.

This whole situation leads me to a question that I think is much more important than the stocks themselves.

What should an investor do when she breaks her own discipline?

When a stock falls below a pre-defined threshold, I believe there are two reasonable paths.

The first is to admit the mistake, set a new maximum loss based on current information, and restore discipline. This prevents a manageable loss from turning into a portfolio-wide problem.

The second option is to completely reassess the original investment thesis. If the reasons for buying the company still hold and only market sentiment has changed, longer-term holding of the position can be justified.

The key question is very simple:

Are you holding the stock because you still believe in its fundamentals, or because you don’t want to realize a loss?

Because those are two completely different situations.

Personally, at this time I lean more toward patience. I don't think the business models of these three companies are broken or fundamentally damaged. What has changed is primarily investor sentiment, valuation and market expectations.

Of course, that does not guarantee a return to growth.

For now, however, I see a stronger argument for re-evaluating the investment thesis than for mechanically selling in hindsight.

How about you? Has it ever happened that you broke your own stop-loss or exit rule and patience eventually paid off? Or do you believe that once discipline has been broken, the best solution is to close the position and move on?

You can find the English version of this post on my eToro profile. If you'd like to follow me there or copy my USD portfolio, I would appreciate it!