Framework #9 Selling/Taking profits

This is maybe the hardest part of investing. When do you sell a stock? Of course, you don't want to miss your long term compounders because you think a return of 20% is great. This is something which I still have difficulties with but in the last months, I've developed a better mindset with regards to selling. As I said, I like to keep it simple, so I have three reasons for selling a stock.

- First of all I think you have to be careful with what you buy. I say no to a lot of stocks. If I see a stock opportunity I think by myself, am I happy holding this stock for a minimum of 5 years? But even better, never selling it? This helps with me not selling the stocks. So I really try to filter to just a few opportunities. I really resonate with Warren Buffett's idea of Punch Card investing. Say you have a punch card with 20 holes for the rest of your life and each time you make an investment you lose a hole which means you got an investment less. You would think really good about those investments. When the stocks you buy are extremely overvalued due to the enthusiasm of Mr.Market, then I might sell and lock in those profits.

- Then opportunity costs are a very important aspect to grasp. If I want to sell a stock I try to figure out if there are other opportunities which are better investments. I use for myself the following framework which is from John Templeton. "Sell a stock only when you have found a new stock that is a 50% better bargain than the one that you hold."

- Last reason why I would sell a stock, something has changed to the investment/business model which hurts the returns. Then it's time to cut your losses.

In the next and last session, I go in-depth on my first filter investment checklist which I use to scan for stocks.

I hope I provided some value to you today! Let me know what you think and your process for selling stocks is!

Link to framework #8: https://app.getquin.com/activity/UTUOucVjAx