Comments on: When Should I Sell My Stock? http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock/ Value Investing Blog Mon, 16 May 2011 10:55:06 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Allen http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock/#comment-435 Allen Tue, 09 Oct 2007 06:11:23 +0000 http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock#comment-435 My analysis showed that I was buying at a steep discount (I may have been just lucky - the company only had 4-5 years of financial data). I didn't anticipate that it would be bought out at all, I was counting on the long-term stock price to follow the "value" I had discovered. So, I did get a huge gain in one month, but only percentage-wise, that's why I wish I had more cash in Septemeber to buy. I also didn't have as much confidence as I am new to value investing. But this boosts that confidence up one notch. So, now I guess I'm going to get cash, as it looks like the company taking over is on a foreign stock exchange. The "bad" part, if you can call it that, is that I didn't want to pay the short-term tax rate, but I don't think I can really get around that now! My analysis showed that I was buying at a steep discount (I may have been just lucky – the company only had 4-5 years of financial data). I didn’t anticipate that it would be bought out at all, I was counting on the long-term stock price to follow the “value” I had discovered.

So, I did get a huge gain in one month, but only percentage-wise, that’s why I wish I had more cash in Septemeber to buy. I also didn’t have as much confidence as I am new to value investing. But this boosts that confidence up one notch.

So, now I guess I’m going to get cash, as it looks like the company taking over is on a foreign stock exchange. The “bad” part, if you can call it that, is that I didn’t want to pay the short-term tax rate, but I don’t think I can really get around that now!

]]> By: Joe Ponzio http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock/#comment-428 Joe Ponzio Mon, 08 Oct 2007 16:34:45 +0000 http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock#comment-428 Great work Allen. I constantly hammer the point of 1-2 years because I want everyone to realize the importance of patience. That said, the reality is that it can happen at any time - even a few days or a month after buying. Just be prepared to wait a few years for the majority of your stock prices to regress back to the norm. I'm a bit confused - did you buy at a steep discount and now your company is being acquired for a fair price? Or, did you not wait for the discount? I guess I'm asking - are you going to pocket a handsome (huge) gain in one month? Great work Allen. I constantly hammer the point of 1-2 years because I want everyone to realize the importance of patience. That said, the reality is that it can happen at any time – even a few days or a month after buying. Just be prepared to wait a few years for the majority of your stock prices to regress back to the norm.

I’m a bit confused – did you buy at a steep discount and now your company is being acquired for a fair price? Or, did you not wait for the discount? I guess I’m asking – are you going to pocket a handsome (huge) gain in one month?

]]> By: Allen http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock/#comment-422 Allen Mon, 08 Oct 2007 11:54:35 +0000 http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock#comment-422 I've only been value investing for a month now. Unbelievably, a company I purchased shares in September is already being bought by another company! It's for a price a little lower than what I calculated as "fair value" using DCF methods, but wow! I have to say, I'm a little disappointed because Joe said that his experience was that it took 1-2 years for a company to become fairly priced, or something of that sort. This was too quick! I'm not sure what to do now, I guess the details of the sale will determine whether I get cash or get shares, but I was not prepared for this so soon. I was ready to buy and hold for at least 2 years. My only regret is that I didn't have more cash to invest in September, and that I didn't learn about value investing earlier. Hopefully, this is the start of a successful run in investing! I’ve only been value investing for a month now. Unbelievably, a company I purchased shares in September is already being bought by another company! It’s for a price a little lower than what I calculated as “fair value” using DCF methods, but wow!

I have to say, I’m a little disappointed because Joe said that his experience was that it took 1-2 years for a company to become fairly priced, or something of that sort. This was too quick!

I’m not sure what to do now, I guess the details of the sale will determine whether I get cash or get shares, but I was not prepared for this so soon. I was ready to buy and hold for at least 2 years.

My only regret is that I didn’t have more cash to invest in September, and that I didn’t learn about value investing earlier. Hopefully, this is the start of a successful run in investing!

]]> By: Joe Ponzio http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock/#comment-343 Joe Ponzio Thu, 27 Sep 2007 10:38:56 +0000 http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock#comment-343 I have to agree with both of you. The only thing I would throw in is that you need to consider the quality of the company. If you own a great company that, for some freakish reason, was selling at a huge discount, you may not want to sell when it is fairly priced. What happens if the stock price never drops to a deep discount again? What if you expect your company to continue to grow rapidly - consistently and comfortably? If, after having bought Coca-Cola in 1988, Buffett had sold in 1990 when the company's stock reached and exceeded the business' value, he'd never be able to buy again and he would have missed out on billions of dollars of gains and his now $250 million a year dividends. My two cents. I have to agree with both of you. The only thing I would throw in is that you need to consider the quality of the company. If you own a great company that, for some freakish reason, was selling at a huge discount, you may not want to sell when it is fairly priced.

What happens if the stock price never drops to a deep discount again? What if you expect your company to continue to grow rapidly – consistently and comfortably? If, after having bought Coca-Cola in 1988, Buffett had sold in 1990 when the company’s stock reached and exceeded the business’ value, he’d never be able to buy again and he would have missed out on billions of dollars of gains and his now $250 million a year dividends.

My two cents.

]]> By: Casey Mattson http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock/#comment-336 Casey Mattson Thu, 27 Sep 2007 06:20:48 +0000 http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock#comment-336 With respect to AF's post: I would say as part of that analysis on when to sell, you need to account for the tax ramifications of the sell date as well. If you are within one year, it may not make sense to sell even if overpriced relative to intrinsic value, but that may come down to your overall view on how the business is doing. If everything remians cool as far as you are concerned, why sell. Inside of a IRA, then go for it, in a taxable account, I think you must take the tax consequence into play. There is my 2 cents. :) With respect to AF’s post: I would say as part of that analysis on when to sell, you need to account for the tax ramifications of the sell date as well. If you are within one year, it may not make sense to sell even if overpriced relative to intrinsic value, but that may come down to your overall view on how the business is doing. If everything remians cool as far as you are concerned, why sell. Inside of a IRA, then go for it, in a taxable account, I think you must take the tax consequence into play. There is my 2 cents. :)

]]> By: AF http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock/#comment-334 AF Wed, 26 Sep 2007 19:26:04 +0000 http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock#comment-334 Hi Joe. I'm also a big fan of Warren Buffett and Benjamin Graham, they're one of the few people who actually make sense when it comes stock valuation and investing philosophy. I just wanted to add to your post that in addition to re-valuing the business ever so often, you should also check where the price relative to the intristic value. If the stock is severely overpriced, you should sell it and buy when drops back to a reasonable price (as long as the fundamental business hasn't changed). I believe that's part of Buffett's strategy as well. Thanks for the cool site and keep up the great work! Hi Joe. I’m also a big fan of Warren Buffett and Benjamin Graham, they’re one of the few people who actually make sense when it comes stock valuation and investing philosophy. I just wanted to add to your post that in addition to re-valuing the business ever so often, you should also check where the price relative to the intristic value. If the stock is severely overpriced, you should sell it and buy when drops back to a reasonable price (as long as the fundamental business hasn’t changed). I believe that’s part of Buffett’s strategy as well. Thanks for the cool site and keep up the great work!

]]> By: Joe Ponzio http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock/#comment-306 Joe Ponzio Thu, 20 Sep 2007 10:04:56 +0000 http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock#comment-306 I calculated the intrinsic value for each year and then plotted it over the price. Of course, stupid me I lost (or accidently deleted) the Adobe spreadsheet. I'll recreate it and post it to this comment later. You should check up on the value of your companies each year. Though businesses tend to change slowly and you can't hold your business accountable for one bad year, you do want to be able to spot problems in owner earnings before they show up as problems in revenues and net income a year or two later. Buy-and-hold doesn't mean buy-and-forget, it means buy-and-let-time-do-its-thing. Time will reward good businesses and penalize bad ones. You need to know if your companies ever cross that threshold. I calculated the intrinsic value for each year and then plotted it over the price. Of course, stupid me I lost (or accidently deleted) the Adobe spreadsheet. I’ll recreate it and post it to this comment later.

You should check up on the value of your companies each year. Though businesses tend to change slowly and you can’t hold your business accountable for one bad year, you do want to be able to spot problems in owner earnings before they show up as problems in revenues and net income a year or two later.

Buy-and-hold doesn’t mean buy-and-forget, it means buy-and-let-time-do-its-thing. Time will reward good businesses and penalize bad ones. You need to know if your companies ever cross that threshold.

]]> By: Sanjay Shetty http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock/#comment-305 Sanjay Shetty Thu, 20 Sep 2007 08:02:15 +0000 http://www.fwallstreet.com/article/63-when-should-i-sell-my-stock#comment-305 how did you plot the intrinsic value of Adobe across the years? Did you have to calculate it each year? Could you share the Excel sheet(s) where you calculated the data. Also does that mean one needs to re-calculate the value each year for all our investments? how did you plot the intrinsic value of Adobe across the years? Did you have to calculate it each year? Could you share the Excel sheet(s) where you calculated the data. Also does that mean one needs to re-calculate the value each year for all our investments?

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