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13-05-2013, 11:07 AM
(This post was last modified: 13-05-2013, 11:37 AM by CityFarmer.)
(31-08-2012, 12:42 AM)Musicwhiz Wrote: Usually, I find that the right time to sell is when everyone gets so exuberant about a business that they price in a lot of future growth prospects which either have yet to materialize, or which may be completely unrealistic.
Essentially, when the value of the business is severely decoupled from the price which is being offered, to the extent that the price offered over-inflates the value of the company significantly, then it may be prudent to sell and look for a better opportunity in terms of value-price mis-match.
Yes, It indeed should be one of the ONLY two reasons to sell. The hardest part is to derive with confidence on the valuation, which by itself is more art than science.
“夏则资皮，冬则资纱，旱则资船，水则资车” - 范蠡
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(12-05-2013, 11:32 PM)felixleong Wrote: usually to sell or not depends on the fair value of the company base on my analysis
Example if I think the stock I am holding is worth $1.00 but mr market is pricing it at $2.00, I would definitely let it go.
If you are a value investor, you probably would have bought the stock that is worth $1 at $0.50.
- Do you sell at $0.80, $0.85, $0.90, $0.99...leaving some money behind?
- Do you sell only if it is at or above $1, your estimate of the fair value?
- If you are selling only at above the fair value, how much more do you want? What expectation do you have on the market for it to give you that premium? Do you watch the market or the fair value more closely at that point?
I think these are valid questions. Market price rarely jumped overnight from $0.50 to $2. It's easy to say sell that dollar for 2 but an investor will have a lot to think about at various prices as the stock traded up.
Remember, at $1.80 that stock would have already exceeded the fair value by 80%. You mean you don't sell from a "fair value perspective" at that point?
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Actually hoh, there are "101 reasons" to sell. i think the worst reason is you have to sell regardless of anything. Why?
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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(13-05-2013, 02:29 PM)cif5000 Wrote: (12-05-2013, 11:32 PM)felixleong Wrote: usually to sell or not depends on the fair value of the company base on my analysis
Example if I think the stock I am holding is worth $1.00 but mr market is pricing it at $2.00, I would definitely let it go.
If you are a value investor, you probably would have bought the stock that is worth $1 at $0.50.
- Do you sell at $0.80, $0.85, $0.90, $0.99...leaving some money behind?
- Do you sell only if it is at or above $1, your estimate of the fair value?
- If you are selling only at above the fair value, how much more do you want? What expectation do you have on the market for it to give you that premium? Do you watch the market or the fair value more closely at that point?
I think these are valid questions. Market price rarely jumped overnight from $0.50 to $2. It's easy to say sell that dollar for 2 but an investor will have a lot to think about at various prices as the stock traded up.
Remember, at $1.80 that stock would have already exceeded the fair value by 80%. You mean you don't sell from a "fair value perspective" at that point?
Exactly. Maybe it goes up to $1.8 and then crash all the way down to 20 cents while one is still pondering whether or not to sell...
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(13-05-2013, 03:18 PM)smallcaps Wrote: (13-05-2013, 02:29 PM)cif5000 Wrote: (12-05-2013, 11:32 PM)felixleong Wrote: usually to sell or not depends on the fair value of the company base on my analysis
Example if I think the stock I am holding is worth $1.00 but mr market is pricing it at $2.00, I would definitely let it go.
If you are a value investor, you probably would have bought the stock that is worth $1 at $0.50.
- Do you sell at $0.80, $0.85, $0.90, $0.99...leaving some money behind?
- Do you sell only if it is at or above $1, your estimate of the fair value?
- If you are selling only at above the fair value, how much more do you want? What expectation do you have on the market for it to give you that premium? Do you watch the market or the fair value more closely at that point?
I think these are valid questions. Market price rarely jumped overnight from $0.50 to $2. It's easy to say sell that dollar for 2 but an investor will have a lot to think about at various prices as the stock traded up.
Remember, at $1.80 that stock would have already exceeded the fair value by 80%. You mean you don't sell from a "fair value perspective" at that point?
Exactly. Maybe it goes up to $1.8 and then crash all the way down to 20 cents while one is still pondering whether or not to sell... I say even if it happens that the company is backed up by solid fundamentals, if Tsunami comes, it's price will drop like a free- falling parachutist from the sky. Alright, maybe a bit slower than some 2nd or third rate companies that can fall like a ton of bricks from the sky. Because when Tsunami comes, herd's instinct take over. O. K. - Even Isac Newton couldn't do anything; and all the "geniuses" too.
That's why over-all i always sell too early. It's a matter of if you don't, then don't regret no matter what happens. On the other hand, some people i know have bought SIA ENGG at $2+ and still holding it at today price -how much? i had sold mine (some) at the highest price of 4.97 or 4.99.
So to each his own device. i think as long as you make money, what's there to complain?
Cheers!
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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buy stocks u will never sell.
sell stocks when u need the cash to buy better value stocks.
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(13-05-2013, 04:15 PM)kayhian Wrote: buy stocks u will never sell.
sell stocks when u need the cash to buy better value stocks. Ha! Ha!
Very clever. i wish i can be sure of what you say when i buy or sell.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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4
13-05-2013, 08:19 PM
(This post was last modified: 14-05-2013, 12:06 AM by hongonn.)
I never sell a stock based on price. Because when my calculated fair value is $2, and the stock rises to $4. Who know maybe is my calculation is dead wrong, in actual fact the fair value is $6, or maybe $8 even.
So i can't decide when i won't know whether the market is right or my calculation is dead wrong, maybe it is a light year wrong :p
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Beside selling in trances above my calculated fair value, I will sell when the risks in execution materialized. All businesses have their execution risks, when signs are pointing more and more clearly their execution is running into troubles... For cyclical companies, but when signs of famine abound and sell when signs of feasting is all iver
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