• Matt Morizio

When do you sell a stock?


You have money in the bank, and if invested properly, you know it can “work for you.” But investments aren’t your forte, so you hire an advisor -

Maybe your college roommate is now a financial advisor,

Or maybe your bank has an investing arm,

Or maybe a close friend or family member recommends someone.

They seem trustworthy, but how can you be sure their investment strategy really works? You don’t want to look up 15 years later only to learn you’ve earned a fraction of what you could have if you hired the right advisor to start with.

Before you invest a dime in the market, you need answers to these three questions: What do you buy? When do you sell? And what do you reinvest the proceeds of the sale in?

And the most important among them is “When do you sell?

Knowing when to sell is fundamental to making money in the markets.

The right advisor will have a strategy that creates a systematic way of not selling your big winners too soon and not holding your losers too long.

I was a minor league baseball player for the first five years of my professional career. Never mind six figures, I didn’t even earn FIVE figures in any of those years. As soon as I finished playing, I had my first child. That was six years ago. Now I have five kids.

I can’t afford to have someone mismanage my investments. I need answers for what to buy, when to sell, and what to reinvest in, and that strategy needs to work really well, for my family’s sake.

This sell discipline is what drew me to Beck Bode.

Here’s an example of how our growth strategy works, highlighting one of our top holdings over the years:

We bought Edwards Lifesciences Corp (EW) in April of 2014 because our strategy dictated it was, at that time, a good stock to buy. On April 4, 2014, it was trading for $37.13. As of July 20th at 2:39pm when I write this, it is trading at $152.38.

Because our sell discipline is designed to let our winners run, we have not sold that stock in 4+ years, and it has returned over 400% to us and our clients.

What if we didn’t have a sell discipline? Would we still own EW?

Or what if our sell discipline was this: “Once we hit our 20% target gain on a given holding, we’ll sell.” A 20% return is pretty darn good!

We would have sold by August of 2014, just four months later.

Or what if we said, “If this stock drops 8% we will sell to prevent any further losses.” On October 21, 2016, EW was trading for $117.68. On December 2, 2016, roughly six weeks later, it was trading for $83.35.

EW stock dropped almost 30% in six weeks.

We didn’t sell.

We don’t have a crystal ball. We had no idea the stock would climb another 80% to date, and we have no idea how much higher it will go. What we lean on is a disciplined strategy that has thousands of hours of research and back testing on tens of thousands of stocks to help us decide what we buy, when we sell, and what we reinvest in.

Want to learn more about our investment strategy? Watch my video below. Or send me a message and I’ll send you a copy of the book that totally changed my perspective on investing, Dancing With the Analysts, no strings attached.

Education is power, and way too many people make uneducated decisions when hiring an advisor or making their own investment decisions.

To make it even easier, if you don’t want to read a whole book, just read chapter six. It outlines the fundamentals we use when investing for ourselves and our clients.

Yes, I’ll send you the book free if you read one chapter.

Here’s the big takeaway: don’t put a dime in the market if you don’t know, in advance, what you’re buying, when you’re selling, and what you’ll reinvest in, and don’t hire an advisor if they can’t answer those questions for you.

#Investing #Performance #FinancialAdvisor

Investment advice offered through Beck Bode, LLC, a fee-only Registered Investment Advisor in the Greater Boston area.