Master the Art of Selling: Timing is Key

Selling securities requires a nuanced understanding and is arguably a different skill set compared to buying. There are three primary reasons for selling: 1) A mistake has been made concerning the fundamental outlook, indicating the thesis is no longer valid. This is challenging as it often leads to 'thesis creep,' where investors hesitate to act because they believe the stock looks cheaper despite its poor performance. 2) The fundamental outlook has been accurate, and the stock’s performance aligns with expectations, making it an appropriate time to sell. This reasoning emphasizes the importance of not rushing to sell even when an asset reaches perceived fair value, as it may exceed expectations over time. Patience can lead to better outcomes, reminding investors to take a measured approach before divesting.