{"id":1188,"date":"2024-07-13T12:40:07","date_gmt":"2024-07-13T12:40:07","guid":{"rendered":"https:\/\/cedcapital.in\/?p=1188"},"modified":"2024-07-13T12:40:07","modified_gmt":"2024-07-13T12:40:07","slug":"when-to-sell","status":"publish","type":"post","link":"https:\/\/cedcapital.in\/?p=1188","title":{"rendered":"When to sell"},"content":{"rendered":"<p><span style=\"font-family: tahoma, arial, helvetica, sans-serif; font-size: 14pt;\">Selling is easier when either the thesis turns out to be wrong or unexpected events impair the business fundamentals. However, the difficulty arises when business and share price both are doing well. The biggest mistake many renowned investors have admitted making is <strong>selling winners too soon<\/strong> (selling a potential 10-50 baggar at 2x). If the business is fundamentally sound, interim price fall may be temporary. Selling sooner would mean forgoing all the future upside.<\/span><\/p>\n<p><span style=\"font-family: tahoma, arial, helvetica, sans-serif; font-size: 14pt;\">On the flip side, however, <strong>endowment effect<\/strong> \u2013 overvaluing one\u2019s things\/ efforts \u2013 can fool us to mistake an ordinary company to be a future winner. Even if we remain dispassionate in assessing the business quality and immune ourselves from endowment effect, we are <strong>dealing with the future<\/strong> which can bring negative surprises. Promoters often failing to predict the future of their companies is a case in point. <strong>Therefore, on the sell date, we can never be fully sure that we have sold right.<\/strong><\/span><\/p>\n<p><span style=\"font-family: tahoma, arial, helvetica, sans-serif; font-size: 14pt;\">Another aspect around selling is an opportunity to re-balance the portfolio by reducing strongly <strong>correlated<\/strong> positions. Over time, the mutual weights of positions change. If price changes lead to increase in portfolio exposure to one or more themes\/factors \u2013 capital expenditure, crude oil, rural demand or capital markets for instance &#8211; selling may allow lowering excess exposure to a single theme\/factor.<\/span><\/p>\n<p><span style=\"font-family: tahoma, arial, helvetica, sans-serif; font-size: 14pt;\">The <strong>middle road<\/strong>, then, is to vary the extent of selling depending on dispassionate assessment of fundamentals, portfolio exposure to a theme\/ factor and degree of overpricing.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Selling is easier when either the thesis turns out to be wrong or unexpected events impair the business fundamentals. However, the difficulty arises when business and share price both are doing well. The biggest mistake many renowned investors have admitted making is selling winners too soon (selling a potential 10-50 baggar at 2x). If the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[9],"tags":[],"class_list":["post-1188","post","type-post","status-publish","format-standard","hentry","category-quarterly-update"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/cedcapital.in\/index.php?rest_route=\/wp\/v2\/posts\/1188","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cedcapital.in\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cedcapital.in\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cedcapital.in\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cedcapital.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1188"}],"version-history":[{"count":1,"href":"https:\/\/cedcapital.in\/index.php?rest_route=\/wp\/v2\/posts\/1188\/revisions"}],"predecessor-version":[{"id":1189,"href":"https:\/\/cedcapital.in\/index.php?rest_route=\/wp\/v2\/posts\/1188\/revisions\/1189"}],"wp:attachment":[{"href":"https:\/\/cedcapital.in\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1188"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cedcapital.in\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1188"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cedcapital.in\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}