Sell Your Company the Successful Stockpicker’s Way
2011
Stocks are the most popular kind of securities investment there is, especially for “Main Street types” who may never understand esoteric instruments such as junk bonds and derivatives but who can be educated in good old-fashioned business fundamentals in order to increase the odds in their favor.
Knowing what to buy and when is an important skill. One way to determine a good bargain is to look at a company as a business you own yourself – for indeed, that is the very definition of a stock owner! And looking at a business this way, it should be a fairly simple matter, then, to decide whether business is good.
Conversely, the same perspective is useful for knowing when to unload your share of stock. After all, as a stock owner, the company belongs to you to the proportion in which you have shares; knowing when to sell your company, in a sense, would be the same, then, as knowing when to sell those stocks!
Think about it: why does anyone sell stocks? Because they imagine that the value of the stock will go down – and not just a little, but substantially; in fact, sellers are betting that the price will never recover!
Why would anyone ever sell the golden goose, a goose that lays golden eggs? If they simply need the money, they could have easily borrowed against the value of the stock – if those are good stocks, of course. (And if they aren’t – well, that’s why they’re selling!)
So should it ever become necessary to unload your stocks, perform a final check first: would you really sell your company now, for the price being offered?
Think of things that way, as if you owned the business yourself, in its entirety. Unless you’re simply speculating (which is different from investing proper), don’t sell the stock if you would not sell your company!