Value Investing with Sven Carlin, Ph.D.|08. Juli
When to Sell a Stock? (Oil Stocks Example)
Key Takeaways for Selling Stocks
- The fundamental oil thesis: If oil is around $60, it's fairly priced; at $40, it's a bargain. The recent boom was not fundamental but temporary (due to war).
- Selling rule: Ask yourself: "Have the fundamentals changed?" If not (e.g., it remains a cyclical commodity business without a durable moat), consider selling when the price exceeds intrinsic value by a wide margin.
- Risk and return: As the stock price rises, risk increases and expected return declines. Check if the stock still fits your portfolio.
- Practical example: For an oil company (like Aker): At a price of $30 with a 10% dividend yield, the margin of safety had shrunk. At $24, the expected return was 12% — below that, the position was increased.
- Realistic expectations: No one is perfect at selling. Even Warren Buffett sold Apple, Disney, and IBM too early. The key is a consistent strategy over 10, 20, or 30 years.
- Make comparisons: Use a research platform to find other stocks with 10–15% expected returns and decide if your existing holdings are ready to sell.
