7 comments

  • Hi Dean,
    nice post
    good to see you blogging more frequently here again!

    Darren

  • BTW, I see in other posts you post comparison vs the All Ords Accumulation Index. Do you know of a publicly available free source for this?
    Thanks

  • Hi Darren
    I’ll post directions on how to get the accumulation data later today. In short https://www.sp-indexdata.com, register, click on other tab, find index, click total returns and your time period, then download. :Dean

  • Hi Dean,

    Ah selling – why is it so hard to make a decision to reduce risk and bank some gain? Counter-intuitive really. I reckon it is the irrational hope for a “better” outcome – rather than settling for a good outcome.

    Given that some people go to great lengths working out whether it is worthwhile to buy a stake in a business, it is surprising that few are accustomed to working out – in advance – criteria for selling – or at least criteria for reviewing selling.

    At the simplest level, perhaps one shouldn’t hold a stock that one wouldn’t buy?

    Andrew

  • Hi Andrew,
    Lovely to hear from you, great comment.

    Jim Cramer, a CNBC talking head, says stocks are either a buy or sell. As you say, if you wouldn’t buy it,sell it. That’s too black and white for me, but Cramer was a successful hedge fund manager before becoming a TV personality and Is reputed to be a very smart guy. It’s probably great advice for a trader.

    I prefer to base my sell decisions on price vs value, the fundamentals of a company and my portfolio weighting/desire for cash.

    Best,
    Dean

  • I venture that the main point is to have consistency. Walter Schloss’ sell criteria is fair value. He admits missing a lot of gains, but that is his system, and his system returned an average of 15% over a few decades. WEB/Munger criteria is getting stuff at fair value and never letting go. To do that, paraphrasing Schloss, you need to be a good judge of both business and management. The sell criteria for both camps are very different.

    Investors find sell decisions difficult because fear and greed are distorting their discipline to stick consistently to their method of investing. There is much merit in Einhorn’s admonition to not invest on an evolving hypothesis.

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