Ask The Compound - Episode Summary

Episode: Is It Time to Take Some Profits?
Date: October 15, 2025
Hosts: Ben Carlson, Duncan Hill, Josh Brown

Overview

This episode tackles some of investing’s thorniest questions: Is now a good time to lock in market gains after significant run-ups? What are smart rules for trimming individual stock positions? How should windfalls like inheritances be allocated, and what’s the best investing mindset for middle age? The hosts, joined by Josh Brown, share candid stories, practical frameworks, and contrarian takes, all while keeping things engaging and accessible for investors at every stage.

Key Discussion Points & Insights

1. Is It Time to Take Profits? (01:41–07:31)

Listener Questions:

• Should investors take profits with the S&P 500 up ~38% since April?
• How to handle big short-term gains in individual stocks versus long-term conviction holdings?

Panel’s Perspective:

• Market timing is extremely difficult.
  “Buy and hold is such an easy strategy in name only, right? It’s so difficult to stick with because of questions like this.” — Ben Carlson [03:09]
• Define why you own each position.
  “These generalized questions make absolutely no mention of what these holdings are and why they were bought in the first place… Neither one of these people knows who they are or what they’re doing.” — Josh Brown [04:07]
• Conviction should mean holding through volatility.
  “You have high conviction unless it works, unless it immediately rewards you, and then maybe you don’t have high conviction. I don’t understand.” — Josh Brown [04:59]
• Distinguish Between Investments and Trades:
  • If your thesis on a company hasn’t played out, big short-term gains shouldn’t make you eager to sell.
  • For trades, set clear technical or price targets and consider using stop-losses.
• Example Perspective:
  “Uber… is up 55% year to date. I’m not like, well, should I sell it? No, because my overarching idea…hasn’t played out yet.” — Josh Brown [09:00]

Memorable Quotes:

• “No one ever went broke taking profits, or do you continue to hold?” — Ben Carlson [03:37]
• “If you’re changing it from an investment to a trade that quickly, it was never an investment to begin with.” — Ben Carlson [06:49]

2. Should You Trim Your Stock Winners? The 5% Rule (11:13–16:30)

Listener Question:
Is it sensible to automatically trim any stock position above 5% of your portfolio?

Panel’s Perspective:

• Arbitrary concentration limits can hinder wealth-building.
  • “If you’re invested in something and it’s going well, why have some arbitrary cap on how much money you can make? It defeats the purpose.” — Josh Brown [12:25]
  • Reference to Peter Lynch: “Selling your winners to buy your losers is like cutting your flowers to water your weeds.”
• Practical Rebalancing:
  • Use broad asset allocation bands for risk management (e.g., stocks vs. bonds), not micro-managing individual positions.
  • Use trailing stop-losses if you need discipline, rather than rigid rebalancing.
• But, risk tolerance matters:
  • Setting concentration limits can help some sleep at night — so consider wider bands, but don’t over-systematize.

Notable Exchange:

• “Charlie Munger said never interrupt something while it’s compounding.” — Josh Brown [13:05]
• “You’re allergic to getting rich.” — Josh Brown, jokingly, to those who constantly trim winning positions [13:52]

3. Handling Inheritances Wisely (19:14–28:02)

Listener Question:
What should you do with a $150-200k inheritance (considering college savings, vacation funds, and home projects)?

Panel’s Perspective:

• No major “leaks” to patch? Allocate for both prudence and enjoyment.
  • “Patch up your leaks first—if you have no debts or emergencies, then allocate to meaningful goals and allow some room for fun.” — Ben Carlson [20:24]
• Acknowledge the emotional side:
  • Inheritances often come with family loss and complex feelings.
• Consider the stage of life:
  • “In your 50s, it’s all about travel. In your 60s, a second property for climate reasons. In your 70s, proximity to grandkids. In your 80s, health limits mobility.” — Josh Brown [25:02]

Notable Quotes:

• “I like that she included vacations…take some of it and actually enjoy it.” — Ben Carlson [22:23]
• “Financial advisors in the years ahead are going to have tons of questions like this about inheritances. There’s going to be so much money.” — Ben Carlson [23:20]

4. Investing in Middle Age (28:12–37:10)

Listener Question:
How should investors in their 40s think about asset allocation, given higher net worth and high savings rates, but still many working years left?

Panel’s Perspective:

• Straddling accumulation and preservation.
  You have enough saved that market declines hurt, but you still have decades to benefit from growth.
• Most in their 40s should stay with high equity exposure.
  • “You should be investing as though you have 50 years left, because you probably do. Stop talking about middle age. Stop walking around afraid of your own shadow.” — Josh Brown [31:47]
• Savings rate and career longevity may be even more important than precise allocation tweaks.
• **Don’t get fixated on hedging or market timing; focus on maintaining your career runway and compounding wealth for future goals—travel, homes, grandkids.

Notable Quotes:

• “If you just stop focusing so much on the next five years… you have nothing right now compared to what you will have.” — Josh Brown [32:41]
• “Focus on extending your career… the worst thing that can happen is you retire and have nothing to do and no income.” — Josh Brown [33:08]

5. Succession Planning and Young Advisors’ Careers (38:02–44:17)

Listener Question:
What should you do if your firm’s owner reveals he’s passing the business to his child, not selling it to staff as expected?

Panel’s Perspective:

• Don’t spend your career building someone else’s business with no path to ownership.
• “Why would they retire? What if they just stop working but don’t retire? What are you gonna do about it? …They’re gonna find some other 25 year old kid and sell them the same promise.” — Josh Brown [40:15]
• Move on if there’s no reasonable succession plan.
  Find a firm with a real pathway to partnership or ownership.
• Wider lesson:
  “You have your whole life ahead of you. Step one is recognizing this is not what you want.” — Josh Brown [43:21]

Timestamps for Major Segments

• 01:41 – Is it time to take profits? Market run-ups and individual stocks
• 07:31 – Distinguishing trades vs. investments; rules for selling
• 11:13 – The 5% Rule: Arbitrary limits, risk, and letting winners run
• 19:14 – Inheritance allocation advice
• 28:12 – Investing in your 40s: Asset allocation & mindset
• 38:02 – Succession planning for young financial advisors

Memorable Moments & Quotes

• “No one ever went broke taking profits…or do you continue to hold?” — Ben Carlson [03:37]
• “Never interrupt something while it’s compounding.” — Josh Brown, quoting Charlie Munger [13:05]
• “I think having some of these rules is not the worst thing in the world.” — Ben Carlson [14:41]
• On middle age investing, “You have nothing right now compared to what you will have…focus on extending your career.” — Josh Brown [31:47, 33:08]
• On succession, “They’re gonna find some other 25 year old kid and sell them the same promise… It’s like a stone collecting moss. The river keeps running by.” — Josh Brown [40:15]

Tone & Engagement

The episode blends humor (“Josh’s stops trading — the market drops!” [19:04]), real-life stories, and direct listener Q&A. The hosts balance tough-love financial wisdom, personal anecdotes, and an accessible approach, making dense investing topics easy to digest and actionable for all.

Useful for new and seasoned investors alike, this episode gives listeners frameworks and stories to help them stick with good habits, tune out noise, and take action—whether that means letting winners run, enjoying a windfall, asking for what you’re worth, or simply staying the course.