31-07-2023, 09:11 AM
As a value investor, I buy when prices are < intrinsic value and sell when the opposite happens.
The challenge is then identifying the overpriced situations and selling to lock in the gains. But this is easier said than done.
I must admit that I have made selling mistakes over the years. I categorize them into 2:
The first mistake is about leaving money on the table ie selling too early. For example, in 2007, I invested in KESM, a Bursa technology company. I bought the shares at an average price of RM 2.00 per share. I had estimated its intrinsic value was RM 5.00 per share.
But for many years, the share price did not move very much. Then it started to go up in 2016. By then I had waited for more than a decade so I decided to get out when the price hit RM 5.00 per share. It was not a clever move in hindsight.
As you can see from the chart below, the share price went up to RM 20.00 per share in 2018. Of course, at that price, it was overvalued. If the wait had been a few more months, I would have gotten a multi-bagger.
![[Image: KESM.png]](https://i.postimg.cc/wvKq7p16/KESM.png)
There is an even more current example in the case of NVR, a US home builder where I went is about 2 years ago. I look at historical prices as illustrated in the case of NVR below
![[Image: NVR.png]](https://i.postimg.cc/rpZhJV1k/NVR.png)
You can see that over the past 5 years, the current stock price is the peak. Can it still go higher?
I know that the property sector is cyclical and we are at the peak of the US Housing Starts. Many newbies would be attracted by the price uptrend and as such may cause market prices to go higher.
Taking this into consideration, should I wait for a few more weeks before selling the first tranche.
For more insights, go to How to grow the stock picking portfolio value?
The challenge is then identifying the overpriced situations and selling to lock in the gains. But this is easier said than done.
I must admit that I have made selling mistakes over the years. I categorize them into 2:
- Selling too early.
- Being greedy and not selling out.
The first mistake is about leaving money on the table ie selling too early. For example, in 2007, I invested in KESM, a Bursa technology company. I bought the shares at an average price of RM 2.00 per share. I had estimated its intrinsic value was RM 5.00 per share.
But for many years, the share price did not move very much. Then it started to go up in 2016. By then I had waited for more than a decade so I decided to get out when the price hit RM 5.00 per share. It was not a clever move in hindsight.
As you can see from the chart below, the share price went up to RM 20.00 per share in 2018. Of course, at that price, it was overvalued. If the wait had been a few more months, I would have gotten a multi-bagger.
There is an even more current example in the case of NVR, a US home builder where I went is about 2 years ago. I look at historical prices as illustrated in the case of NVR below
You can see that over the past 5 years, the current stock price is the peak. Can it still go higher?
I know that the property sector is cyclical and we are at the peak of the US Housing Starts. Many newbies would be attracted by the price uptrend and as such may cause market prices to go higher.
Taking this into consideration, should I wait for a few more weeks before selling the first tranche.
For more insights, go to How to grow the stock picking portfolio value?