To: Ron Bower who wrote (3402 ) 3/3/1998 From: Paul Senior Read Replies (3) | Respond to
Ron. Selling is possibly the final frontier in the art of profiting from the stock market . As I say I don't have a real good or even consistent method. I think that for some companies - Buffett companies or even lesser - something maybe where a person can peer into the future and say, yes this company will still be around - and it's a company that I want to partner up with - then at some point it's reasonable to expect that company's stock price will exceed fair or full value. Perhaps common sense or a natural inclination would be to take profits, move on to something else (or just hold the cash), with perhaps the intent to move back into the company when its price is lower. That does sound very reasonable to me---BUT I do not think it is necessarily a basis for selling the stock. I see stories of people who've traded in and out of the same stock very successfully; their rationale being worse comes to worst they'll hold 'til the stock comes back. Other people sell and never (well maybe once a decade or two) get their chance to buy back in at what they consider a reasonable price. I just think there is a place or time in investing where one says, okay the stock is too high, but I'm not going to sell it just because it's high-- I'm a partner in the business and I'm in it for the very long term-- Especially if I sell, I know I'll have trouble getting back in. As you know, a least a couple of people on this thread do IMO a super amount of research on a stock or industry before they commit funds - large amounts of funds. This is the old Phil Fisher method. That rationale goes something like this: if the company (stock) is chosen correctly, the best time to sell is never. If people are spending that much time and effort and dollars to find a good company - their partner company I call it - then it could or would be a mistake IMO (Phil Fisher's too I recall?) to sell the stock just because it's 20 or 40% overvalued now --because its sales & earnings will grow and bring the value in line. And as Honest Abe says there's a good mathematical case that can be made for not selling so quickly. Unlike finding undervalued companies, opportunities to buy into partner companies at reasonable prices are few IMO (and again Phil.). (There aren't a lot of new companies being mentioned on the Buffettology thread! -g-)
