When to Sell
The hardest decision in investing — made systematic
In 1980, an investor in Walmart faced a hard choice. The stock had risen ~50% since IPO three years earlier. Conventional advice said 'take some off the table.
' The investor sold half the position. By 2020, that decision cost them roughly \$2 million per \$10,000 sold — Walmart compounded for forty more years. The opposite case: an investor in Sears Holdings in 2007 watched the stock rise ~30% on a hedge-fund 'turnaround' thesis; conventional advice said 'let your winners run.
' The investor held. By 2018, Sears was bankrupt and the position was worthless. Selling and holding both have catastrophic failure modes — but the failure modes are completely different.
Selling too early is the lost-compounder failure; holding too long is the lost-thesis failure. This lesson is about systematizing the decision so the failure mode you avoid is the one you're actually in.
That is the opening. Finishing a lesson is where it stops being interesting and starts being useful: the full lesson runs to 5 sections and ends with 4 practice questions. A free account is what opens the rest, and the other 255 lessons in the Academy with it. No card.
What this lesson covers
- 1The would-I-buy-it-today reframe — the single most useful sell-decision tool
- 2Inversion — Munger's mental model applied to sell decisions
- 3Sequoia Fund and Valeant — when not selling becomes a structural failure
- 4Where to see this on the platform
- 5Summary