So how do you define a double bagger?

So how do you define a double bagger?

Obviously if I make a single investment of £5k in a share and it doubles in value to £10k it has double bagged. Simple. But what if I subsequently top up at a higher price which has the effect of reducing my overall gain below 100%? So now I don’t own a double bagger?

I ask this question because I regularly read on forums like Stockopedia SCVR claims of double bagging (or more) which are open to misinterpretation or can be simply deliberately misleading.

In my own portfolio I have 27 individual shares. but none can be categorised as having double bagged in entirety.

However, 5 individual shares have double bagged in regard to my initial investment but subsequent top ups have reduced the overall return on each to below 100% overall.

Also 3 others have double bagged in regard to individual subsequent top ups (buying in dips) but again overall gain on each is below 100%.

In my view I don’t own any double baggers but others in my position might claim otherwise.

So what do you mean when you claim a double bagger?

Snazzy

Hi Snazzy

Good question. Peter Lynch popularised the term 10-bagger in his book One Up On Wall Street. Sadly he did not go into further detail about subsequent top-ups and the appropriate bagger naming convention :slight_smile: which creates the misinterpretation.

I think the general convention is to use whatever term gives the best impression of your investing skills to the reader :slight_smile:

My approach is to base the ‘bagging’ on my initial investment.

For example I refer to Tristel as a 10-bagger on my blog:

…but I did sell 68% of my shares before it became a 3-bagger (point 6 :point_up_2:), and I do make my selling clear to avoid any misinterpretation.

You can get into real bagger-definition problems. Say you invest £5k in a 10p share. It goes to 200p, a 20-bagger!, at which point you have £100k. You then get carried away and invest £100k at 200p, only for the price to crash 50% to 100p.

You can still claim to have bought a 10-bagger, but your portfolio P&L would be saying something else.

Maynard

2 Likes

Is it necessary to define it! For me, success is success.

hi Maynard

That’s great for those who wish to brag and massage their ego :slightly_smiling_face:

This seems the most appropriate method to me.

So now I can feel justified in claiming I have 5 double baggers. That brings a nice warm feeling and a boost to confidence for the start of a new year :smiley:

Snazzy

1 Like