Stock Selling Evaluations

Hi Saul, I have been working for the last few months to improve my decision making analysis for the stocks to purchase and I’m relatively happy with that at this point.

Where I feel less confident is in deciding when to sell a stock. The Fool just recommends we hold through all the ups and downs and that is pretty much what I have been doing.

It seems that you have a much better process.

From prior posts of yours, I understand that you do a graph that compares the P/E against a standard.

I’m sure there is more to it than just the graph.

Can you explain your process a bit so that I can understand it better and then do some things differently to improve my process?

It would be greatly appreciated.

Also, if others have good approaches that they would be willing to share I would love to learn from you all as well.

Thanks so much for starting this board. It’s been very enlightening for me so far and I’m sure this will continue in the future.


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Brian, I do two graphs on each of my stocks. One, once a week and the other once a month. Here’s how I described them.

13. If you have the time, do a weekly graph on your stock, on old fashioned large graph paper. It helps you keep things in perspective. A drop from $51 to $49 doesn’t look so bad if you look back and see that it’s been between $52 and $48 for the past six weeks, or if you see that your stock rose from $40 to $51 in the previous two weeks and the “drop” to $49 is meaningless. (The problem with graphs that your computer makes is that a move from $10.00 to $10.05 will fill the whole space if that’s the whole move for the day or week. There’s no fixed scale.) Mark where you made purchases.

14. Peter Lynch suggested a monthly graph of stock price vs trailing earnings on a log scale map, which I have found very helpful. I scale it so that if the stock is twenty times trailing earnings the price and the earnings graphs will overlap. That gives you a quick visual perspective of whether the stock is cheap, reasonably priced, or wildly priced, and also give a nice visual of how fast earnings are growing that you can compare with your other stocks, as you use the same scale for all of them.

I again suggest getting Peter Lynch’s two books as part of your basic education about the market. Get them in paperback so you can see the graphs. They are each under $10 on amazon and worth the small expense.

Of course there’s a lot more that goes into sell decisions than a graph. I’ve written about how I make sell decisions and I suggest you go back through and read the posts because I can’t write it all up again each time, and it makes more sense for you to look back through the posts than for me to do it each time someone asks a question. I don’t mean to be harsh, it’s just too time consuming for me.




Also, if others have good approaches that they would be willing to share I would love to learn from you all as well.

If you want to improve your selling techniques, set a limit on how many stock you will buy, either a dollar limit or an amount of companies.

Then keep reading all that MF sends out about this or that company as well as stories from other sources.

You’ll find that at some point you will be so enamored with a new stock story that you just have to get in on the ground floor.

That will force/motivate you to find something to sell. If you are an opportunist like me, you will be hard pressed to sell a winner or a loser without checking closely what that stock MIGHT do.

Problem solved.

Just saying,

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