When Does Buffett Sell a Stock? - Views on News from Equitymaster

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The Equitymaster Research Digest

When Does Buffett Sell a Stock?
Jul 13, 2016

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Everyone is always interested in what the Oracle of Omaha looks for when buying a stock. But no one really talks of his selling.

The perception is that he strongly favours the 'buy it and forget it' approach. That may be the ideal, but it is a rarer reality than most assume.

Warren Buffett's 'buy and hold forever' approach mostly works for truly extraordinary businesses. If you have the stock of an extraordinary business in your portfolio, it makes sense to hold on to that stock and not sell it for the sake of churning the portfolio. But that does not hold true for all the stocks in the portfolio.

Let me explain further with a cricketing analogy. We all acknowledge that Sachin Tendulkar was the best Indian batsman ever, perhaps the world's greatest batsman. During his career, he was a regular fixture in all matches - tests and one-day internationals - in India and overseas.

Now, however great Sachin was, he did have his off days. But was he dropped from the team? No. So extraordinary was Sachin's batting that even a slew of poor performances during certain periods was never reason enough to replace him with someone else.

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