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Investing 101E X I T S T R A T E G Y
Too many overlook this
Wtf is it?
Itâs the point at which you will sell a position once predetermined criteria for that position have been metYou MUST establish this criteria BEFORE you buy said stock - bake it into your thesis. https://twitter.com/fisavvydad/status/1344008821409259520
Example:
Company A revenue: $100M
Your research reveals:
⢠A growing list of SKUâs
⢠Additional retailers adopting its products
⢠A loyal, growing consumer base
⢠Awesome branding
You therefore feel confident company A will grow revenues by 5 times in the next 3-5 years
Company A revenue: $100M
Your research reveals:
⢠A growing list of SKUâs
⢠Additional retailers adopting its products
⢠A loyal, growing consumer base
⢠Awesome branding
You therefore feel confident company A will grow revenues by 5 times in the next 3-5 years
You feel confident that beyond that point, the total addressable market is exhausted & rapid growth will slow
Exit strategy options:
1 - Sell, reinvest money in new, high growth stocks
2- Company A, now established & consistently profitable pays a dividend. Take the dividend...
Exit strategy options:
1 - Sell, reinvest money in new, high growth stocks
2- Company A, now established & consistently profitable pays a dividend. Take the dividend...
At your insane yield based on your super low cost-basis!
3- Take all/some profits - keep initial investment in place and divert free cash-flow to other opportunities.
NOW - fundamentals can change!
What do I mean...
3- Take all/some profits - keep initial investment in place and divert free cash-flow to other opportunities.
NOW - fundamentals can change!
What do I mean...
A new, innovative competitor may come into the space & disrupt your once solid investment growth
Or a market landscape could completely change! Much like it did for UBER when COVID hit.
This is why you always monitor your positions periodically for risks.
Finally...
Or a market landscape could completely change! Much like it did for UBER when COVID hit.
This is why you always monitor your positions periodically for risks.
Finally...
In summary:
Always have an exit plan. Note it down with your stock tracker spreadsheet or journal.
But, remain informed and flexible with this plan.
Plans can change.
If you want to start investing, or have questions
DM me
https://twitter.com/messages/compose?recipient_id=1157202355458387968
Always have an exit plan. Note it down with your stock tracker spreadsheet or journal.
But, remain informed and flexible with this plan.
Plans can change.
If you want to start investing, or have questions
DM me
https://twitter.com/messages/compose?recipient_id=1157202355458387968
