when to sell, especially after event or situation starts to play out?

[villainx]

I am normally a buy and hold investor, but I do allot some room for pseudo speculation situations.  That said, I have no idea what to do when the situation happens. 

 

For examples:

 

- I asked on the investing board about AWH.  I didn't buy that to speculate but more of an around book value, space holder.  Well, Fairfax came along and I have no idea what to do.  I don't even think I understand the terms of the purchase (what Fairfax stock would I be getting).

 

- Yahoo was a speculative play.  I bought it as a BABA proxy and figured sum of part was worth more than what I bought it for.  After a bit of a run up, I don't think I totally understand what or why I am still holding.  Has it reached its fair value?  or if there still some upside, what exactly is the risk? 

 

- Fidelity National Financial.  From what I gather from Greenblatt, a bit of value is suppose to be unlocked with spinoff and various restructuring.  There has been several events at FNF, and I can't make head or tails with what is going on. Or what I'm suppose to do.

 

For the most part, all of the above are relatively tiny positions, partly because to mitigate from my lack of exit strategy.  But at the same time, the small initial positions leave me with even tinier spinoff positions too.  For the more seasoned investors here, what things do you look for or help guide you? 

[villainx]

Or maybe folks can share how their sell/exit strategy came about and or developed?  The selling part really doesn't get analyzed or discussed as much.

[merkhet]

I think selling depends on the type of company you're holding.

 

If it's a shitty company with very poor capital reinvestment/allocation ahead of it, then you should sell immediately after the event. If it's a pretty good company with good capital reinvestment/allocation ahead of it, then there's probably no point to selling unless you find something much better to replace it with...

 

But everyone has their own sell disciplines, *shrug*

[Patmo]

Some of my opinions:

 

• If there's a price jump based on a rumor, sell indiscriminately. Gotten burned a couple times not doing this, and profited a ton from doing it. The few times you will lose out are not worth holding
  
• If things are moving and you don't get what's going on anymore, either wrap your head around it or sell
  
• I don't believe in the 'buy long term for max profits!' mentality anymore, there is way more money to be had farming quick 30-50% bumps (remember how compounding works). It's better to buy stuff insanely cheap (by my proprietary professional assessment method called Guesstimating™), take a fat bite off when a catalyst plays out or price self-corrects a bit from dropping too much, and leave some meat on the bone for the next guy to go after.
  
• Selling too early is not a crime in my opinion, but buying too early is. There is no shame to be had in selling, so if you don't know what to do, sell
  

 

To be taken with a grain of salt, different strokes for different folks

[Uccmal]

Some of my opinions:

 

• If there's a price jump based on a rumor, sell indiscriminately. Gotten burned a couple times not doing this, and profited a ton from doing it. The few times you will lose out are not worth holding
  
• If things are moving and you don't get what's going on anymore, either wrap your head around it or sell
  
• I don't believe in the 'buy long term for max profits!' mentality anymore, there is way more money to be had farming quick 30-50% bumps (remember how compounding works). It's better to buy stuff insanely cheap (by my proprietary professional assessment method called Guesstimating™), take a fat bite off when a catalyst plays out or price self-corrects a bit from dropping too much, and leave some meat on the bone for the next guy to go after.
  
• Selling too early is not a crime in my opinion, but buying too early is. There is no shame to be had in selling, so if you don't know what to do, sell
  

 

To be taken with a grain of salt, different strokes for different folks

 

Most of that resonates with me.  But I compartmentalize my holdings.  I do have a few long term compounders that I got on the cheap and will continue to hold.  However,  I do thin them out as valuations get high.  Nothing stopping me from buying back in when they inevitably revalue and I have done this.  In fact my biggest hits have all been revisits. 

 

If I get real quick pops for no tangible, or lasting reason, I will right size a position, or get out.  US Financials would fit this bill right now.  I have schooled myself not to care what happens after I sell a stock, and I really do not care.  I learned this 20 years ago when I had a few quick pops, and didn't get out, or at least shrink a position.  If it seems to good to be true, it probably is. 

 

This is something that takes experience and a huge dose of humility.  No one knows the future and can predict it to any level of accuracy or precision.  VR was going to be the next biggest thing 20 years ago, except it wasn't.