Buying is an act of analysis. Selling is an act of judgement. Intelligence helps you identify opportunities to buy into. Wisdom helps recognise change to get out. And until you sell, you only have paper gains (although you may have accounting profits — you cannot eat accounting profits, whatever accountants tell you).
Over the past few months, we have had readers who asked, “How do you decide when to exit investment in a stock or reduce exposure to the equity market?” It is a far trickier question to answer in any comprehensive manner, unlike why we bought shares of Company A or B or why we do not like Company C or D. Below is our attempt to provide a broad answer — because the reasons and the circumstances are always different.
With thousands of options, it takes some intelligence to find the right company, analyse its financials and understand its business model. Maybe even see what others fail to see. This matters, but it’s only half the craft.
