IFB166: 3 Questions on Selling

Announcer (00:02):

I love this podcast because it crushes your dreams and getting rich quick. They actually got me into reading stats for anything you’re tuned in to the Investing for Beginners podcast led by Andrew Sather and Dave Ahern. Step-by-step premium investing guidance for beginners. Your path to financial freedom starts now.

Dave (00:32):

Welcome to Investing for Beginners podcast. This is episode 166 tonight, Andrew and I are going to answer some list of questions. We got some great ones the other day, and we thought we would answer those for you guys on the air. So the first question I’m going to go ahead and read. This is from Corey says, hi, Andrew. I just started investing a few weeks ago and found your ebook podcast and e-letter incredibly informative and helpful. I do just have a couple of questions about when to sell. So assuming we have done our due diligence and decided company XYZ is a company we should purchase after we make the purchase. Number one, how often do we reevaluate the company? Number two, how do we decide? Is it time to sell your position? Thank you for all your help and guidance you’ve given so far. I look forward to continuing to learn from you. Sincerely Corey, Andrew, what are your thoughts on all that?

Andrew (01:25):

So I’m going to give you two answers. I’m going to give the, what should the average investor do, and then I’m going to answer, what do I do? So those are going to be two very different things because I have the newsletter that I do full time, right? And the average investor might not. So for the average investor and when I was more of a part-time investor, it was something where I would check once a year. You know, sometimes if, if a big news thing happened to come out or obviously with coronavirus, I think everybody kind of tuned in to how things were developing, because it was such a rapidly changing environment. But, you know, in normal circumstances, just waiting for the annual reports, waiting for those 10 Ks once a year and getting those audited financial statements and seeing how those change from year to year, that’s generally a good process for that.

Andrew (02:23):

If you’re buying for the long term, you’re not necessarily trying to, you know, squeeze the juice out of every percentage point that you can. I think that’s, that’s a really good way to go as an example. You know, I did my research on the value trap indicator years ago, where I looked at the top 30 biggest bankruptcies in the 21st century. And, you know, just really went through those financials and tried to see if there were any common characteristics in there. And there was, you know, there were a lot of instances of companies who were the red and a lot of instances with companies with a lot of debt. So, you know, those things sound simple, but you know, sometimes the best answers aren’t always the most complex. And with, with each of those, you know, a lot of these businesses in the years before they went bankrupt,