Boring Portfolio Report
Thursday, January 25, 1996
BORING THOUGHTS ON STOCKS
By Greg Markus (MF Boring)
WHEN TO SELL.
All of this leads to what is for many folks the toughest decision to make in investing: "When do I sell?" Personally, I feel no need to wring the last dollar from a stock and prefer to make a steady string of base hits rather than swing for the fences. (I know: boring.) So if I've made a decent profit on a stock and the fair value indicators are approaching unity, I sell.
Here, again, I may depart somewhat from Peter Lynch's stated guidelines. (I've got some nerve, huh?) My own view is that Lynch's talk about "stalking the elusive ten-bagger" has caused some investors to hold onto stocks long after they should have sold them. The maxim that "the best time to take profits is when you have some" is worth considering.
I also reassess the basic story underlying my purchase decision if the stock price declines by 15% or so and sell in a minute if that story may be changing for the worse. I've missed some big gains by this approach, but I've avoided some major down-drafts, as well. I'm willing to buck the market for a stock I believe in, but only up (or, I should say, down) to a point. I guess that's pretty boring, too.
What about charts? Two-hundred day moving averages? Candle sticks? All that stuff? Do I use any of that? The answer is ... a bit. I certainly look at charts. They can be quite helpful in filling out the story of a stock's *fundamentals.* Does the chart show that the stock took a dive last December? Wouldn't I like to know that? (I would.) Shouldn't I then try to find out why that happened--by going back over old news, for example? (I should.)
Also, if my research indicates that a stock is a bargain, but its price has been falling, falling, falling for weeks--even months--on end, I confess to hesitating to purchase it until it begins to settle down, at least a little. Avoiding "falling knives" is also pretty boring.
That's an overview of my approach. It's not a story for the ages. It's a work in progress. We talk, we study, we argue, we screw up, we celebrate, we learn. Each of us has something worthwhile to offer. I propose we get started!