Knowing When To Sell

Knowing what stock to buy is relatively easy. It is just a little research.

Knowing how much stock to buy is a more difficult decision.

There are two position sizes: too big and too small. If it goes up, you were too small, and if it goes down, you were too big. I have been both at various points in my career.

But the decision about when to sell is the most difficult decision of all.

No Room for "If Onlys"

A lot of people make fun of the founders of Instagram for selling their photo-sharing platform to Facebook (FB) for $1 billion since it is now estimated to be worth over $100 billion.

But you can’t fault them for selling at $1 billion—if they refused Zuckerberg’s offer, Facebook would have gone and made its own Instagram. And ultimately, $1 billion is a lot of money. If you quit smoking, you might be able to live off of that.

There are some stories floating around out there about people who sold Apple (AAPL) in the 1980s. IF ONLY THEY HAD HELD ON, THEY WOULD BE BILLIONAIRES.

This is fairly common Monday-morning quarterbacking. The decision to hold on seems so obvious in hindsight.

I mean, who in 1986 couldn’t have seen that Apple would one day develop the iPhone and be able to maintain 35% profit margins on it? That it would develop the manufacturing and operations expertise to make and distribute hundreds of millions of phones each year? I mean, who couldn’t see that?

Ultimately, people end up selling their stocks when they have made enough money.

That number varies from person to person. It depends on how big your imagination is.

Some people have a small imagination, and some people have a big imagination. There are risks to both. Arguably, there are more risks to having a small imagination.

Stocks can go to infinity, after all. But for the people who think stocks go to infinity, they risk doing the round trip on their investments.

As a side note, I am not sure what Tesla (TSLA) investors are playing for here. Then again, I thought there was no way Apple, at a $1 trillion market cap, could go to a $2 trillion market cap.

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Disclaimer: The Mauldin Economics website, Yield Shark, Thoughts from the Frontline, Patrick Cox’s Tech Digest, Outside the Box, Over My Shoulder, World Money Analyst, Street Freak, Just One ...

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Jared Green 1 month ago Member's comment

Wooo sell then don’t worry 😉