The Art of (Not) Selling

Of our most costly mistakes over the years, almost all have been sell decisions.

The mistake, in virtually every instance, has been selling too soon. Reflecting on these mistakes gave rise to this letter, and its title, “The Art of (Not) Selling.”

Taking a step back, our investment philosophy involves concentrating our capital in a small number of what we believe to be growing and competitively advantaged businesses. These kinds of businesses are rare and are only periodically available for purchase at attractive valuations. With that in mind, we do our best to hold on for the long term, so that our capital may compound as the businesses grow.

Holding on means resisting the temptations to sell — and there are many. We tune out politics and macroeconomics. To the surprise of many, neither valuation nor price targets play a role in our sell decisions.

To be clear, there may be times when we believe it is appropriate to sell. In these instances, it is typically because of an adverse change in the business itself.

This determination to hold on is a critically important, and not always well understood, aspect of our investment philosophy. At its core, it relates to the power of compounding. We believe these two ideas — (not) selling and compounding — are inextricably linked. Getting the first wrong makes the second impossible.

Allowing our investments to compound uninterrupted is our North Star.


Random Walk Theory teaches that the current market price is accurate based on currently available information. And you have no idea what the next sale will be–up, down, or sideways. Its a risk.

Best available info leads us to decide that certain stocks are more promising than others. But the risk does not go away. Especially with rising interest rates, the war, possible recession, and who knows about Covid.

Recovery one day is likely but who knows when. Patience is needed. Those with accumulated reserves can tolerate a lot. Its those with a tight budget and short time frames most at risk. And most likely to make the wrong choices.

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