I Have Never Sold Stocks for This Reason

A couple of announcements before I begin today’s post – 

1. Mastermind Value Investing Course – ₹2,000 Discount Ends Today: I invite you to join my premium, online membership and course in Value Investing – Mastermind – at a special discount of ₹2,000, available till end of day today (25th June 2024). Mastermind teaches a structured, step-by-step process of stock picking as practised by the world’s most successful investors. And it’s not just a course anymore, but an all-in-one membership to my most detailed value investing course, plus exclusive members-only content like special articles, ebooks, transcripts of my podcasts, notes from the books and other timeless resources I am reading, and curated content that I am consuming and learning from. Click here to know more about Mastermind and join.

2. Rethinking Financial Freedom Masterclass: I am holding a 2-hour online session on the subject of “Rethinking Financial Freedom.” The session is free for Mastermind members. However, if you are not one, you can join the session by registering now. The session will be on this Saturday, 29th June 2024, from 8 to 10 PM IST, on Zoom. Recording will also be available after the class. Click here to know more about this masterclass and join.

---

I am a ‘buy-and-never-sell’ kind of investor. But I have sold a few stocks in the past.

I have sold stocks that I realized were mistakes to begin with. I have sold stocks that did not move for a few years (and then they moved!). And I have sold stocks when I needed money for my requirements and had no other asset to encash.

In fact, I have also created an illustration on when you should sell your stocks –

But there is one important reason for which I have never sold my stocks. Not a single one.

That reason is – “Markets have run up quite a lot and should crash anytime now.”

I have never sold a single stock anticipating a market crash. Of course, sharp and continued surge in stock prices makes me anxious – and a bit dejected, because I don’t get enough opportunities to invest more – but thankfully I have never given in to such anxiety and liquidate a part of my portfolio as a way to time it well.

One key reason that I stay put with my stocks, whatever the market is doing or may do soon, is that I only own high-quality businesses that I expect to do well over the next few decades.

I am not here to try and act smart (because I am not) and behave like a savvy investment professional who can time entries and exits well and live long to tell the tale.

Instead, my investment philosophy is too simple that allows me to sleep peacefully at night without the worry of what my stocks are doing/may do in the near term. Very much like what the old Hero Honda ad from the mid-eighties asked its customers to do after filling up the fuel tank of its high-mileage bikes – “Fill it, shut it, forget it” (though I do not forget the stocks I own and review them from time to time).

My biggest lesson in compounding is that saving more, thinking long-term, and allowing compound interest to work in your favour act as accelerators for wealth creation. There is nothing complex about this.

You can even be the world’s worst market timer and still build great wealth over 3-4 decades only if you do one thing – keep buying quality investments, and never sell.

Of course, the idea of buy and hold is simple, but not easy to practice.

The act of ‘not acting’ on a longer timeframe is made up of hundreds of small decisions that lead to the ultimate decision to ‘not act.’ Also, businesses change from time to time, and so do emotions, and so do the behaviours of other investors around us, and so do conditions in the stock market and of our portfolios. And that’s why sitting on stocks – the ones that remain high quality – is not as simple as it sounds. And that’s why patience is one of the most important yet difficult skills one must cultivate while investing in the stock market.

George Baker made a powerful remark which Thomas Phelps quoted in his book 100 to 1 in the Stock Market –

To make money in stocks you must have “the vision to see them, the courage to buy them, and the patience to hold them.”

Patience is the rarest of the three and is not an easy skill to develop however easy experienced investors or advisors may make it sound. But if developed and practiced well, it pays off handsomely in the long run.

That’s how fortunes are made in the stock market.

You just need to be prepared for the grind and stop worrying about what the markets may do next.

---

That’s about it from me for today.

If you liked this post, please share with others on WhatsApp, Twitter, LinkedIn, or just email them the link to this post.

If you are seeing this newsletter for the first time, you may subscribe here.

Thank you for your time and attention.

Regards,
Vishal