FIRE Stage 1 Accomplished: Trimmed Arista Networks (800% Profit)

This wasn’t a planned move.

It was a sudden decision triggered by the strong rebound in Arista Networks (ANET). After hitting a low of US$116 in late March, the price hit US$145 – a surge of 25% in less than a week.

This rapid reversal made Arista only the second US stock in my portfolio to move into the green this year (the first being my opportunity buy of Netflix (NFLX) earlier this year)

Call it intuition or experience, but this “too far, too fast” signal triggered a “sell” alert in my gray matter.

This wasn’t an impulsive act though.

I weighed those signals against three rational factors before deciding to trim 20% of my stake on Thursday’s evening.

1. A Highly Uncertain Environment: Despite the temporary ceasefire, the geopolitical situation remains on a knife-edge. While I hope for a long-term resolution, the chance of escalation remains significant.
   
2. Elevated Valuation: At a low-50x PE, Arista is trading above its historical average of low-40x. The growth remains strong, with management guiding for a 25% increase in sales for FY2026. However, any macro-induced miss could trigger a steep market re-rating.
   
3. Replenishing the Cash Buffer: My strategy is to replenish my 3-year cash buffer whenever the portfolio hits a 10% return along the year or 6% by year-end.
   
   Though I haven’t hit 10% yet, the recent rally pushed projected returns to more than 8% provides a prudent window to de-risk.

3 Lessons from the Trim

Without these considerations, I likely wouldn’t be selling a high-conviction play right now. Yet, there are vital lessons in this move.

Better Off Doing Nothing

Arista has performed exceptionally for me over the past six years. While the stock is “only” up 8% this year, it represents an 800% return from my average purchase price. Even after repeatedly “trimming the wings,” it remains a top-five position.

This simply meant that I would have achieved a far higher return by simply doing nothing.

Moreover, my decision to keep it as a core holding reflects my belief that Arista will eventually surpass its previous highs.

So why didn’t I just hold on?

Preserving Instead of Accumulating

I may be nagging here, but the distinction is vital: I am in a different phase of the journey now.

A decade ago, I would have simply let the returns compound. With the safety net of a monthly salary, I would often treat market volatility as a “sale” and use my active income to increase my stakes.

In those days, my focus was on accumulation.

My primary objective now is to preserve what I have built. For my peace of mind, these sales are a strategic necessity — especially for growth stocks that don’t declare dividends.

Since I cannot rely on a quarterly payout from Arista to fund my expenses, I must be disciplined about harvesting gains when the opportunity arises.

To be clear, preservation doesn’t mean letting the portfolio stagnate; it simply means I am no longer optimising for every last percent.

This shift in strategy has served me well over the last few years. In fact, it is the primary reason I can confidently say I have successfully survived the first stage of my FIRE journey.

FIRE Stage 1 Accomplished

Back in 2022, when I was pondering whether to leave my career, one key criterion was ensuring I wouldn’t run out of money before gaining access to my CPF savings in 2029.

I’m pleased to announce that with this sale, I have successfully completed that mission.

What’s even more satisfying is that reality has outperformed my projections. I find myself not just surviving, but in a stronger financial position than when I started.

More importantly, I have gained experiences that would never have been possible had I not taken the plunge into the unknown.

I’ll leave you with a reflection I wrote three years ago, at the very start of this transition.

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Do we have only one life?

While we may only have one physical life, we can live multiple “lives” by embracing new experiences at different stages.

I had a fulfilling 20-year career as an educator. Between strategic planning and engaging with students, there was never a dull day, and the appreciation from colleagues sweetened the journey.

But as I approached 50, I began to ponder what I wanted for the remaining third of my time. Life expectancy is a fickle thing, after all.

The yearning for a new experience became too strong to ignore.

I took a courageous leap down a new path without a precise map. I remember asking my children what they wanted to be when they grew up.

“A writer,” my daughter replied. “A YouTuber,” said my son.

By marrying my interest in investing with my background in education, I began writing more for my blog and sharing knowledge online.

While the YouTube channel was eventually sidelined due to the time commitment, the writing resonated. Seeing my readership grow — and recently being invited to guest write for The Smart Investor — solidified my decision.

I still don’t know exactly where this path leads. But I am so glad I started my “third life.”