Philip Fisher: When To Sell

From Fisher's book, Common Stock And Uncommon Profits. Chapter 6.

WHEN TO SELL

Fisher is very precise about when to sell. “I believe there are three reasons, and three reasons only, for the sale of any common stock which has been originally selected according to the investment principles already discussed.”

They are:

1.) Upon realizing a mistake,

2.) When a stock no longer meets the 15 points, and

3.) If a substantially attractive investment arises and stock needs to be sold to finance that investment.



Interestingly, Buffett’s commonly told parable about investing in your classmates seems to have originated out of this chapter. Both describe a hypothetical scenario of buying a percentage of the future earnings of a classmate. The point being that we should rationally select people on the basis of their character rather than purely on their intellect. Fisher notes how foolish it would be to sell your lucrative future contract on classmate’s earnings for the sake of buying another, less proven, classmate’s earnings, simply because somebody offered to buy your original classmate investment at a high price.

Previous Philip Fisher articles

1. Philip Fisher Articles: Finding Growth Stock
2. Philip Fisher Articles: Investing in Growth
3. Philip Fisher Articles: Conservative Investors Sleep Well
4. Philip Fisher Articles: Switching Stocks
5. Philip Fisher: 15 Checklist When Buying A Stock
8. Philip Fisher: 10 Commandments That An Investor Must Not Do
9. Philip Fisher Articles: Over-Diversification
10. Philip Fisher Articles: Stocks To Avoid
11. Philip Fisher Articles: Competitive Advantage
12. Philip Fisher: More On 15 Checklist When Buying A Stock