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Today at a Glance:
Lesson From the Book: When to Sell
Tweet: What is happening with Indian stock markets?
Quote from Lou Simpson
Snippets: 3 Snippets from different books & 3 Awesome Pages of Investing Insights
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When to Sell (Book)
This is probably as good a time as any to discuss the other half of the investment equation— when to sell. The bad news is that selling actually makes buying look easy— buying when it’s relatively cheap, buying when there’s a limited downside, buying when it’s undiscovered, buying when insiders are incentivized, buying when you have an edge, buying when no one else wants it—buying kind of makes sense. But selling— that’s a tough one. When do you sell? The short answer is— I don’t know. I do, however, have a few tips.
One tip is that figuring out when to sell a stock that has been involved in some sort of extraordinary transaction is a lot easier than knowing when to sell the average stock. That’s because the buying opportunity has a well-defined time frame.
Whether you own a spinoff, merger security, or a stock fresh out of bankruptcy there was a special event that created the buying opportunity. Hopefully, at some point, after the event has transpired, the market will recognize the value that was unmasked by the extraordinary change. Once the market has reacted and/ or the attributes that originally attracted you to the situation become well known, your edge may be substantially lessened. This process can take from a few weeks to a few years. The trigger to sell may be a substantial increase in the stock price or a change in the company’s fundamentals (i.e., the company is doing worse than you thought).
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One Tweet
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One Quote
One lesson I have learned is to make fewer decisions. Sometimes the best thing to do is to do nothing. The hardest thing to do is to sit with cash. It is very boring.
- Lou Simpson
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Interesting Books Snippets/tweets shared during the Week
1. Raamdeo Agrawal's Investments during the 2000 Technology Boom and his learnings (Book)
2. There are huge advantages for an individual to get into a position where you make a few great investments and just sit back (Book)
3. Recognising risk often starts with understanding when investors are paying it too little heed, being too optimistic and paying too much for a given asset as a result. (Book)
How To Invest in Cyclical Stocks
Investment secrets Of Seth Klarman
Important Learnings from RajeevThakkar's interview with ET
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