Thread by @caprichinvest

I have been receiving requests to write about When to sell a stock/ investment ? #Whentosell

I’m writing this thread based on when I sell and logic behind the selling an investment

1. I sell when my investment thesis is wrong or the investment is playing out for wrong reasons

I invested in a few pharma companies with a hypothesis that #USFDA issues,pricing issues will be sorted and growth return to normal, but currently pharma has given me > 100 % returns for wrong reasons which I did not hypothesise #Covid19

2. I sell when my research or my analysis is wrong

In 2016 I invested in #Tarajewels based on #Graham net net, I was on a 30% profit, when i reanalyzed I found I missed to take into account #contingentliabilities and sold the position.

3. I sell when I realise I’m talked into an idea unconsciously #authoritybias

In 2015 I invested in LIC housing, after thinking about my decision process I came to realise my thesis was based on another investors view without good research.

4. I sell when the management is going on a Diworsification

When capital allocators have no opportunity to invest they try to tread into waters that the management has not been into before. That’s a warning sign - KPR mills entering sugars from textiles.

5. I sell when I need to accumulate cash in PF due to #euphoria or when im anticipating a fall.

In 2018 I observed mid cap and Small cap P/E was > 25-30. So I made a call to sell a few losers and accumulate cash holding upto 30 % of my PF.

6. I sell when i find better opportunities. #opportunitycost

When attractive opportunities and lower re-investment risk (in term of frequently changing investments) you should sell. I prefer a good compounder for 10 years rather than, a good inv for 3 yrs than churn again.

7. I sell when when the Risk : Reward is no longer attractive.

From 2014 tracking my investments, my winning average is 55-60 %, so I try to make a 100% in winners and try to limit my losses in the 40% losers. So when an already existing inv doesn’t meet this criteria I sell

8. I sell when the management is not executing on what it has promised.

The management of #SKM repeatedly had given views to double sales in 4 years from 2017 which it failed to achieve and also other promises it failed to deliver.

9. I sell when the company invested is not looking for scalability and is complacent .

I exited #Gabriel when I found #Endurance technology is operating in the same business but their market was scalable and expandable for growth.

10. I sell when I find the company invested is having a higher lower side than anticipated upper side, this is the #holygrail of risk management in any investment.

I made an investment in #KGDENIM, after one year when I revisited the hypothesis I realised it had higher downside

According to 80/20 #Paretoprinciple , these are the most common 20 % of the factors that are responsible for 80 % of the results in selling an investment.

Please add ther reasons when you sell an investment.

Disclaimer - Sebi-Registered analyst, Above stocks are not recommendations . Only for educational purpose.