The Psyche of Selling: Selling is harder than buying, so when...

The Psyche of Selling: Selling is harder than buying, so when and how do I sell?

Here are 4 reasons why I would sell:

1. Sell when you find something better. You want to always evaluate new opportunities against what you already own. When you find an investment that is much better than a current investment you sell.
2. Sell when the story changes, and I try to know the companies better than anyone so I can spot the changes before anyone.
3. Sell at the first sign of management incompetence or unethical behavior. Sometimes management teams make a decision that is so bad you have to sell. The reason is because of the cockroach theory. When you see one bad decision there will be more that follow.
4. Sell when the company gets very overvalued. I’m a long-term investor but there are cases where the stock price gets way too far ahead of the business. Evaluate the current valuation against your three or five year expectations-estimates.

Your “gut feeling” is normally right because it’s the sum total of all your perceptions. Listen to your gut.

(IAN CASSEL)