It’s Not Easy - Memo By Howard Marks

Discussion in 'Must-Read Interviews, Articles & News Items' started by Meenakshi Razdan, Sep 10, 2015.

  1. Meenakshi Razdan

    Meenakshi Razdan Administrator Staff Member Moderator

    Mar 19, 2015
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    - Investors can be tempted to sell during corrections like this one. Oftentimes emotional behavior is cloaked in intelligent-sounding rationalizations like “it’s important to sell down to your comfort level.” But the valid reasons to sell are principally because you feel fundamentals have deteriorated or because the price has risen enough. Selling to get more comfortable as prices fall (just like buying for that purpose in a rising market) has nothing to do with the relationship between price and value.

    - Another reason to sell, of course, is fear that the slide will continue. But if you’re tempted to do so, ask yourself first whether you think the stock market is going to rise or fall tomorrow, and second how much you’d bet on it. If you can tackle those decisions in your head rather than your gut, you’ll probably admit you have no idea what’s going to happen in the short term.

    - Regardless of the outlook for fundamentals or the relationship between price and value, many people sell in a downdraft because, well, you have to do something, and they feel it’s unreasonably passive to just sit there. But something about which I feel strongly is that it’s not the things you buy and sell that make you money; it’s the things you hold. Of course you have to buy things in order to hold them. But my point is that transactions merely adjust what you own, and engaging in them doesn’t necessarily increase potential profit. Sticking with what you own may be enough – although it may not be easy in tough times.
  2. kharb

    kharb Well-Known Member

    Aug 15, 2015
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    To me selling is always a tough decision than to buy.It is very difficult to decide when to sell ,even at start of fundamentals going wrong ,We hope for reversal in performance.But in this hope sufficient time is lost and by then we had sufficnt price correction ,after that it looks like a value pick and after further wait we look like fool in waiting and price are at rock bottom with big hole in portfolio.Simialry when stock going up,We think it is going to be a multiplier and will rise by x time and we have hit gold mine. Then we find stock going down ,we think it is correction in bull run of stock and gains are wiped out.I have bought large no of stocks in my life and intialty almost all have gone up substaintly but as I am not a good seller , lost major gains due to poor sale decision.Some time I think that these are risk and hazards associated with long term investing.But I have paid a heavy price for this .Meenakshi Razdan can you help me out to become a good seller or how to protect profits.How to know gains are temporary and needs to be booked, or we are for long upward journey of super profit.
    Last edited: Sep 11, 2015