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.
The professional money managers would have been further ahead to simply pick stocks from their portfolios at random to sell, rather than making the ‘human’ sell decisions they actually made. They should have used darts rather than their brains.
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’.
Really wonderful companies will often get overpriced and selling means losing a position in a first-rate company.
If the job has been correctly done when a common stock is purchased, the time to sell it is – almost never
The investment principles around selling losers and holding winners are one of the most important and subtle topics in investing; laden with psychological pitfalls
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