- Written by Dan Ferris
- Sunday, 25 October 2009
It's no small wonder I'm not finding any cheap stocks. More and more, the best investors I know are either selling stocks and raising cash as their holdings approach or even exceed fair value... or they're selling stocks and increasing the size of their short positions.
On Friday I spoke with a very wealthy and experienced investor who says he's selling some "lower conviction" stocks and raising cash. He reminded me of an old Buffett idea for deciding if it's time to sell:
Look at each stock you own and ask yourself if you'd rather see it rise in price so you can sell... or fall in price so you can buy more. If you'd rather see it rise in price, you should consider trimming the position or selling it out entirely.
Ideally, you want to find yourself holding an entire portfolio of positions about which you have a high sense of conviction. Those are the ones you wish would get cheaper, so you can buy more of them.
Crux note: Dan Ferris is the editor of Extreme Value, and he's currently recommending a true rarity in the gold industry - a deep-value gold stock with the very real potential to return 28 times your money. If you're not already a subscriber, click here to sign up...
More from Dan Ferris:
Why you must own this "World Dominator"
Why you shouldn't care about short-term gold predictions
"We're taking an even bigger share of your paycheck... and you can't do a thing about it."