I’m a newbie investor and have just discovered this board.
I’ve been thinking about Saul’s advice on when to sell a stock. In October 2018 I bought a small amount of SFIX, which has done nothing ever since. At the moment I’m running about a 17% loss.
Thinking about Saul’s advice on admitting that you have made a mistake, I’m thinking of selling SFIX and using the proceeds to buy CRWD.
On the plus side, CRWD has shown much better performance than SFIX over the last few months. Also I don’t understand the subscription retail business (SFIX), but I do have some inkling on cybersecurity and the need for it.
On the minus side, I was just as fed up with MELI and was about to sell it, when it went on a bull run and now I’m up 86% on that stock.
I need the money for something else (new house or a “better” investment)
The company performance is significantly deteriorating. Note the emphasis on COMPANY performance. That does NOT mean stock performance, which is often unrelated to how the company is doing. If the company is doing well, the stock will eventually follow. Regardless of one’s emotional inclination.
On the other hand…
A) I don’t sell because I’m bored with how the stock price is doing if the company is doing well
B) I don’t sell because the stock drops if the company is doing well
If you’re a newbie investor, this may sound strange but the above stuff (and sharing it with others) is why The Motley Fool exists.
Rob
Rule Breaker / Market Pass / Supernova Navigator Home Fool & STMP/MTH Maintenance Coverage Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
Hello ijv, welcome to Saul’s Investing Discussions!
Your question is basically one of portfolio management which is off-topic for this board dedicated to the discussion of individual high growth companies.
Since you are new to investing and this board, you may want to review the following to help you get oriented and know what Saul expects:
I interpreted his question as on-topic with regards to when to sell a growth stock and I will beg your forbearance to answer that question.
ijv,
As a new investor you need to be wary of selling a stock “just because it hasn’t gone up” (ie SFIX) or buying a stock “just because it is performing well”. That mindset can cost you a whole lot of money, in my opinion.
I am not saying you should hold turkeys forever, but you should resist the urges caused by the market. Often the market will cause you to sell just when all hope is lost (which is, in general, a terrible time to sell).
A conventional answer to your question is that you should sell a stock when your reasons for buying it are no longer true. Hopefully your reasons for buying it were well thought out in the first place. If they were not, then you should work on that.
So I recommend you look at SFIX in that lens. Has their growth been disappointing to you? It hasn’t been super impressive to me by the standards of this board. Its profits aren’t growing (not uncommon in a small company), but I prefer to see some of that revenue growth drop through. Are you concerned about customer retention? It has been a general worry for me with SFIX but I haven’t checked their numbers (I am not in the stock). How about the CEO’s perception and performance? She is high profile, you should listen to her on the calls and her frequent media appearances.
If you didn’t have strong reasons for buying, I would indeed sell now, and then re-evaluate CRWD (I have no position) with a deeper lens than just “Saul bought it” so that you actually have some kind of sell criteria later.