The decision to sell a stock is, in many ways, trickier than the decision to buy. My own observation is that investors in common stocks should never be conditioned to sell outperformers. There is a time to fold ‘em. But its not simply because their price has outperformed the market or some benchmark.
In effect they acknowledge that going down the Capital Asset Pricing Model rabbit hole with Alice did not get them to Wonderland. Their solution is to go further down the same rabbit hole.
It got to a point a few weeks ago when AMAT’s price was some 60% above fair value. It struck me that the price reflected serious ‘irrational exuberance’.
Declining free cash flow may be a sign the company is investing for the future! Or it may be a very bad sign. Increasing free cash flow may be a good sign or a bad sign. It’s all in the interpretation of the financials.
What could be more advantageous in an intellectual contest – whether it be bridge, chess, or stock selection – than to have opponents who have been taught that thinking is a waste of energy?
If the job has been correctly done when a common stock is purchased, the time to sell it is – almost never
Buffett analyzed companies more subjectively than Graham, and he found intrinsic value in companies, such as See’s Candies, that Graham would not have touched.
Can we improve on the accuracy of these estimates by obtaining estimates from, say, 22 leading investment banks and averaging them?
A group with a high anchor were prepared to pay three times as much for the same wine as a group with a low anchor
I would rather be vaguely right than precisely wrong
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