During this time, I believe many friends have seen their stock holdings rise significantly. Honestly, I've been repeatedly asking myself the question, 'When should I sell?'

When your cost basis has multiplied several times, and you see the numbers fluctuating in your account, the temptation to 'take profits' is immense. But the hardest part of investing is often not finding good opportunities, but rather, after a good opportunity takes off, how to prevent fear or greed from stripping away your objectivity.

Exiting (Exit Strategy) is an extremely profound art, because it's not just about valuation, but even more about your control over human nature.

Here are the four core questions I ask myself in sequence when facing 'multi-bagger stocks,' a decision framework I use to combat emotions and maintain discipline.

▋1. Is the original thesis still valid, or has it deteriorated?

Recall, what was your core reason for hitting the buy button initially? Was it based on a structural change that takes several years to validate (e.g., corporate transformation, the beginning of a new technology cycle), or a short-term economic cycle or event-driven factor?

Market stock prices often 'front-run' due to emotion, reacting prematurely to optimistic expectations for the future. But we must clearly distinguish: Is this rise due to the narrative itself being more widely accepted by the market, or because the narrative has been validated by execution and transformed into solid fundamentals?

If the grand story has only just begun, and its key milestones (e.g., new business turning profitable, establishment of a technological moat) still need 12 to 24 months to be confirmed, then liquidating your position merely because of 'rising stock prices' is akin to getting up and leaving after the first movement of a symphony.

▋2. How much 'margin of safety' is left in the valuation?

Does the current price already discount all the good news for the future?

I will re-evaluate my Bull Case scenario. Sometimes, with strong fundamental performance, the initially assumed 'optimistic scenario' gradually becomes the 'Base Case.' If the current price merely touches the base case scenario, and future growth potential remains clear, then I will choose to continue holding.

The reason to sell should not be 'it has risen too much,' but rather 'it has become unreasonably expensive.'

You need to honestly ask yourself: Does the current price already discount several years of perfect future expectations?

When market consensus is highly aligned, and all good news has been priced in, the margin of safety naturally becomes thin. At this point, even if you are bullish long-term, moderately reducing exposure is a rational choice.

▋3. Position Management: Is the structure of your investment portfolio still solid?

This is a macro perspective, moving from the individual stock level to the asset allocation portfolio, and it's the most challenging aspect for discipline.

When a successful individual stock skyrockets, causing it to occupy a disproportionate weight in your total assets (e.g., rising from 10% to 25%), your investment portfolio transforms from a diversified structure into a single-risk-dominated bet.

No matter how much confidence you have in the story, a healthy investment portfolio structure is always more important than any single investment opportunity. Actively selling a portion of your holdings to 'Rebalance' might seem like giving up potentially greater profits, but in essence, you are buying 'insurance' for your entire portfolio.

The premise of 'letting profits run' is not to let a single case become your concentration of risk. Selling a portion does not mean you're not optimistic; rather, it's to protect your overall portfolio, allowing you to maintain a clear mind even if you encounter a sudden black swan event, instead of being forced to cut losses at a low point.

▋4. The Ultimate Psychological Test: If I had cash today, would I still buy it?

This is my last line of defense. Imagine you don't own this stock at all today, you only have cash on hand, and given the current price and information, would you still buy it?

- If the answer is 'absolutely yes,' then continue to hold, or even add to your position.

- If the answer is 'absolutely not,' then sell.

- If your answer is like mine, in the gray area of 'uncertain, not yet 'no,' but also not yet 'definitely would buy,'' then 'Hold' is the most rational conclusion.

▋Investing is for enjoying compounding, not for predicting volatility.

I belong to the 'high conviction long-term holding' camp. I won't rush to take profits just because the market reacts earlier than I expected. I'd rather let the market rise for a while, and then enjoy greater compounding when the fundamentals truly materialize.

Exiting is difficult because there's no standard answer. Everyone's risk tolerance, capital turnover needs, and time horizon are different.

My advice is: you can refer to these four questions, create your own version, and then strictly execute it. In this noisy market, what can usually save you is not some insider tip, but your disciplined framework that still functions normally amidst the frenzy.

After weeks of discussing semiconductors, those who were meant to profit should have done so by now, and those still indecisive will likely remain hesitant due to fear of heights. It's time to shift our focus to what has been structurally altered after this 'war' that is worth our research. In my latest in-depth analysis, I explored the logic behind four major themes: LNG, oilfield services, refining, and fertilizers. I recommend everyone read the full article.

- KP