A great article from the Economist on the when to divest importance from an investment and how and when to make that decision.

This would be equally applicable to your stock portfolio, but also at corporate level from business units.

It is true that 90% of the literature is about on how and when to buy, but equally important and value generating, but oftenly forgotten, is when to sell.

I have a simple rule when buying or selling, if the value is under the low range of my valuation by more than 20% i should buy and when it is higher that 20% of range of my valuation, I should sell :-).

The range is the interquartile of my valuation (usually done via a Monte Carlo simulation of 6 to max 10 key business variables).

Key takeaways from the article:

1- Buying and selling 2 side of the same coin,

2- Should track also the ones you have sold to check if it was appropriate and learn,

3- Define a “Kill- Criteria” for every investment and stick to it.

Happy readings!

When to sell your stocks economist.com/finance-and-economics/202… from The Economist