136 - Selling Stocks for Value Investors (Part 1: Strategy Matters)

Want Investing Research Directly to your Inbox? Sign-up for my Free Substack: https://diyinvestingstocks.substack.com/subscribe? Mental Models discussed in this podcast: Second-Order Effects Mean Reversion Factor Investing Please review and rate the podcast If you enjoyed this podcast and found it helpful, please consider leaving me a rating and review. Your feedback helps me to improve the podcast and grow the show's audience.  Follow me on Twitter and YouTube Twitter Handle: @TreyHenninger YouTube Channel: DIY Investing Show Outline Selling Series A lot of time is spent on buying stocks. Yet, almost just as important, if not more is knowing when to sell stocks.  I find this area relatively underexplored, so I want to begin a long-term series on selling stocks from the framework of a value investor.  Previously talked about selling in a single episode on Ep. 106 Today's focus: Strategy matters There is no one-size fits all approach How you buy stocks will influence how you sell them Your portfolio allocation strategy will matter THe number of stocks you review in a year will matter Whether you plan to own a cash position or not will matter. Excluded from this series: Won't be discussing momentum investing Won't be discussing trading or technical analysis investing (except as a marginal part of value investing when relevant) Entire focus assumes that you are a value investor of some sort (whether deep value, compounder, graham value, quality, etc…) Deep Value: Buy at 2/3rds of value and sell at "full price" Compounders: You want to hold for a long-time.  Sell when compounding ends, plateaus or you were wrong Net-Nets Hold a year then reassess Waterfall Stocks:  Hold so long as dividend yield is sufficient to provide target return Dividend Growth Investing: Buy companies that pay dividends and grow them and sell them when they cut or eliminate their dividends Buy and Hold "Never sell" Works for a subset of stocks Tends to overlap well with compounders and Dividend Growth investing