Read on Twitter
1/ When to sell (thread)
I rarely sell, but that doesn't mean I never do it
Here are the 11 reasons why I sell a stock
I rarely sell, but that doesn't mean I never do it
Here are the 11 reasons why I sell a stock
2/ Thesis Busted
This can be boiled down to "I was wrong"
The original reason why I bought the stock is no longer valid, due to
Competition
Legal Ruling
Management
Moat Narrowing
Outside force
....etc
Thesis busted = admit defeat and move on
This can be boiled down to "I was wrong"
The original reason why I bought the stock is no longer valid, due to
Competition
Legal Ruling
Management
Moat Narrowing
Outside force
....etc
Thesis busted = admit defeat and move on
3/ Accounting Irregularities
If I can't trust the numbers, how can I make decisions?
Companies like $LK are dead to me for life
If I can't trust the numbers, how can I make decisions?
Companies like $LK are dead to me for life
4/ Mega Acquisition I don't like
Most big acquisitions destroy value and distract management
Ex: I'm still not convinced $TDOC / $LVGO will work out
Only time will tell
Most big acquisitions destroy value and distract management
Ex: I'm still not convinced $TDOC / $LVGO will work out
Only time will tell
5/ Thesis Complete With No Second Act
If the company captures its opportunity and runs out of room to grow, I'll sell and roll proceeds into higher growth opportunities
Tricky to tell, but organic revenue growth below <5% is a decent proxy
If the company captures its opportunity and runs out of room to grow, I'll sell and roll proceeds into higher growth opportunities
Tricky to tell, but organic revenue growth below <5% is a decent proxy
6/ Cultural Deterioration
Management exodus
Leadership transition
Glassdoor rating plunge
....etc
Management exodus
Leadership transition
Glassdoor rating plunge
....etc
7/ Extreme valuation + Enormous Market Cap Compared to opportunity
High Valuation is OK if I think a 10x return is possible
High Valuation NOT OK if I think there's only room for a 50% gain in a best-case scenario
High Valuation is OK if I think a 10x return is possible
High Valuation NOT OK if I think there's only room for a 50% gain in a best-case scenario
8/ Too Large A Position For me
15% of my portfolio is my max for SUPER high-quality business (ex $AMZN)
10% is my portfolio is my max for a low-quality business (ex $NNOX)
15% of my portfolio is my max for SUPER high-quality business (ex $AMZN)
10% is my portfolio is my max for a low-quality business (ex $NNOX)
9/ Company Acquired
I hate it when companies I own get bought out, but it happens
If odds are closing are very high, I sell and move on
I hate it when companies I own get bought out, but it happens
If odds are closing are very high, I sell and move on
10/ I Need/Want Money For Personal Life
Isn't this the reason we invest in the first place?
Isn't this the reason we invest in the first place?
11/ Tax-Loss Harvesting
Will sell losers to lower tax bill
Will sell losers to lower tax bill
12/ All of these guidelines covered in the "When To Sell" tab of my public spreadsheet
https://docs.google.com/spreadsheets/d/1y8quPLqAwNsBGvNUrJuMTqVwz-P59ms1A8ZDLE8Dc24/edit?usp=sharing
https://docs.google.com/spreadsheets/d/1y8quPLqAwNsBGvNUrJuMTqVwz-P59ms1A8ZDLE8Dc24/edit?usp=sharing
