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The Equitymaster Research Digest

How to Know When to Sell a Good Stock
Feb 7, 2017

  • Finding the middle ground between Ben Graham and Philip Fisher
  • Time to worry about IT stocks?
  • Vivek's not impressed with the new cash donation limit to political parties
  • The intelligent investor is a realist who sells to optimists and buys from pessimists. - Benjamin Graham
  • If the job has been correctly done when a common stock is purchased, the time to sell it is - almost never. - Philip Fisher

Warren Buffett once quoted Isaac Newton...

  • If I have seen farther than others, it is by standing on the shoulders of giants.

He was referring to Benjamin Graham and Philip Fisher.

But how do we reconcile these two giants? They are like chalk and cheese. Such vastly different investing styles.

We can't. But the good news is, we don't have to.

Ben Graham, the father of value investing, played a numbers game. He found statistical bargains. Many of them. He bought them from pessimists and sold them to optimists.

Specifically, he sold them if they went up by 50%, or after three years, whichever came first.

As simple as that.

Then there's Philip Fisher. He didn't like selling his stocks at all.

Buffett famously adopted Fisher's 'no selling' rule and dumped his mentor's rule.

But here's the thing. Both rules are extreme.

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