Saturday, 28 November 2020

Hardest part of investing for me is knowing when to sell

 

Some reflections:


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Sell when you no longer believe in a company

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When the fundamentals change, sell it.

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Honestly, when I would have sold the stocks in my portfolio which were 40% down instead of up, I would have made far better returns.

Ask yourself a question: "would I buy at this price?"

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When your position doubles, sell half and let the house's money ride.

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Depends on your investment horizon. 

Great business will continue to grow as will their price in the long term. Short-term volatility will always be there. If you’re invested in great businesses don’t worry about short term price fluctuations.

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If you’re looking for short term gains then you can consider using options to supercharge your returns. But first learn how to trade options.

For the short term, the power of technical analysis will give you indicators of when to sell.

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Depends what you are in it for. 

I have long term holdings and trading cash. 

Long term is just that, as long as the story doesn’t change I hold. 

Trading cash is completely different and gets a bit wild. Can be in and out in a day if the return is good enough.

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For Deep value stocks, or stocks that you buy simply due to cheap valuation, some investors simply buy and exit when the stock is close to 90% of his calculated intrinsic value. 

But if the business deteriorate to the point whereby the intrinsic value keeps eroding, you might want to sell it once you find a better opportunity.

For growth investing or superior business, if you managed to find a good price to enter, try to never sell it unless the fundamentals / thesis changes.

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I very rarely sell. I try to find companies I believe in long term. I only sell if something changes so I no longer believe that companies can give me good returns. Like if a see a shift in technology or how people use products.

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If you are not willing to buy again then it's time to sell

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I use allocation of portfolio. for example, I allocate 20% portfolio to AMD. when it rises, I will be gradually trimming it over time and transferring the funds to other stocks I find of value. When it start to crash, I will buy gradually as it goes down. This will inevitably mean I wont sell at highest or lowest. But valuation will also help me decide the %allocation so when AMD is overvalued based on the metrics, I chose to drop it to 15% of portfolio so I sell 25% of my holding. I use this as a guideline to discipline my buying and selling.

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I control my greed by setting the selling price BEFORE I buy the stock.

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Actually if it is an uptrend stock, don’t sell, ride the trend ... set a trailing stop like if it falls back more than 10% from new high, get out, else just ride the trend .... this is not greed ðŸ™‚

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As long as the fundamental doesn’t change and the management continue to commit and grow the company... never sell

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Always have a sell mark before buying the stock unless you are planning to hold long term. And that is if it is positive or negative. You may lose some profit but I'd rather take a little profit than lose it all.

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I like a trailing stop loss. The stock can still go up, but if it starts to fall I don't lose my gains.

How often is the stock stop loss triggered? Has the stock price ever gapped below your stop loss?

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Be greedy. Don't sell your winners just because they're up. Only sell when your original thesis no longer holds. Don't practice portfolio socialism lol

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Do whatever consistently works for you. Doesn’t matter what I say or anyone else.

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You shouldn’t sell. Unless the number is ridiculous, I’ve learned to avoid selling. If I never sold any of my positions I would easily have over 100 more money today.

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I sell when is overvalued 15-20%~.

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I set up trailing stop sell orders when a stock reaches 7 percent gain.

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Have a plan when you buy it, then stick to the plan, whatever it may be, sure you can re-evaluate but by and large stick to the plan.

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It's a loaded question. It depends on your plan/goals. Part of your plan is whether your stocks are in taxable vs qualified accounts. I tend to rebalance once or twice per year in my qualified accounts. I'm a net buyer of stocks in each year in the taxable account that I intend to hold very long term for compound growth and at that time sell very little for income.

In my IRA, my goal is to build equity/net worth and consider converting some stocks for income/dividend. The end of each year, if the fundamentals change for a company, I highly consider selling.

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That’s another great question.

Buffett actually covered a piece of this in his most recent annual meeting...

Quoting back something that Sir John Maynard Keynes (an old, and very famous economist) was famous for saying:

"When the facts change, I change my mind. What do you do?"

In other words, one of the biggest reasons, and probably the most difficult is to actually change our minds when our original thesis for the investment has fundamentally changed.

Trust me when I say that this is not easy.

I like to say you should hold onto our opinion the way we have to hold onto a bar of wet soap. If you hold on just a little bit too tightly, it's likely to get away from you when you need it...

The second biggest reason is when our investment thesis actually comes true.

I think it was Guy Spier who talked about how much more difficult it is to sell something we own, than it is to buy into it.

We get attached to it. Especially if it's making us money!

I literally ran into this recently.

I bought a company that I determined to have an intrinsic value of roughly $23. I bought in at $10. in less than a year it quickly went up from $17 to $23 and guess what I did...

Nothing!

The story in my thesis hadn’t changed and it would have still been a great investment (prior to COVID) but even though I knew it was at fair value, I didn’t act.

I’m still trying to analyze that and figure out if I made the right or wrong choice.

Obviously if I knew a pandemic was going to hit it would have been the right choice to sell, but it’s not true when people say hindsight is 20-20.

There are always factors at play that we can’t see.

Honestly right now I think it was greed that made me hold on.

The speed at which it was rising was too exciting and I probably allowed my “what if” emotions to kick in.

Everyone who's not a robot struggles with this (bleep bleep blorp for you robots out there...)

The simple answer is to know what something is worth and only ever sell when it’s roughly 20% above that fair value.

Normally my rule is to sell at 120% fair value, so it wasn’t quite there, but I could have just sold and been happy with the return I would have got.

I think it goes back to that 80/20 principle. Except we can flip that in it’s head.

If we are waiting for 80% of the time to receive our last 20% is that time we’ll spent?

John Templeton, one of my favorite investors, would have had a sell order already set after he bought the stock.

He was amazing at doing anything he could to eliminate his emotions while he was still rationally analyzing the business.

I think I should start this as well.

One of the beautiful aspects of investing is that’s its continuous learning.

I think we can all learn a lesson from this. And as you can see.

As you can clearly see... I’m still learning.

Hope that helps!

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Sell as much % as you are up, quarterly. Buy as much % as you are down.

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Never. I usually buy with the intent of keeping the cash flow Forever. I sell if the company seems to be collapsing, or I have made such a huge growth that I want to invest in something else. This is just my way of investing, and my tip - it’s in no way the only or «correct» way to invest. ðŸ˜Š

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Put a trail limit and let it run.

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Check the volume versus the 10 day average volume to be able to see a good exit strategy....not really a value investing type of thing....but has helped me understand why stocks go up and down throughout the day!

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Make a habit of rebalancing chances are if a particular stock is overvalued it will be a larger portion of your portfolio so you can sell some of it and use that money to buy another stock you deem undervalued.

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Don’t sell for years. Quit trying to time the market. Buffet holds for decades.

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As soon as you think about "should i sell?"...sell some. Better to be a fool and lose out on more gains than a fool who rode his gains back down to break even or worse...a loss.

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For people with a "PURE" value investing strategy, a P/E of 40 or a minimum of 50% profit is a good time to sell in the short-term (Walter Schloss strategy). Personally, I prefer to seek great companies and never sell if the fundamentals don't change. ✌️


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I sell when I find something better

 

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If it's a great business purchased below intrinsic value and now overvalued, I'd keep it anyway. You may not a get another chance to purchase it below intrinsic value. If you're feeling like you're becoming too concentrated in one position, go ahead and trim it, but great businesses are seldom undervalued.

 

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Philosophically!!! This is the question that you have to come to self realization. you will always wrong when you sell is your thinking. You sell with a profit but price go higher so you think you are wrong. You sell at a loss but the price bounce back so you think you are wrong. You sell at a profit then price drop you still think you are wrong because you should sell at the very top. the whole idea is you are not happy with yourself no matter what. So it would make more sense to set a goal for a time period and when you reach the goal celebrate and set the next goal. Don’t bother if you are right or wrong. 2 steps back < than 1 big step forward to reach your goal. This is just a game.

 

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