We put a lot of emphasis on buy side investment decisions. However, the sell side can make the difference between success and failure. We’re going to consider 3 reasons for selling a stock and examine two common mistakes made by value investors:
...Stop loss orders are a widely used investment tool that value investors should mostly avoid. Many investment pundits frequently recommend using stop loss orders as a risk management tool. But for value investors this can be the wrong tool.
...The words investment probability theory might initially cause your eyes to glaze over with boredom. But I believe I can make it practical for you and we can learn important lessons from a basic understanding of investment probability.
...Dividend growth investing combines the benefits of compounding dividends, compounding the growth of dividends per share, and the increasing value of the shares themselves. The key principle is to take advantage of the power of exponential growth by reinvesting growing dividends over long periods of time. Interest compounding is a powerful financial concept, but dividend growth compounding multiplies the benefits of exponential growth.
...Exponential growth is sometimes described as the “miracle of compounding” because of the extraordinary explosion that takes place over time. Investors can use double time and the Rule of 72 to estimate the power of exponential growth to meet their retirement goals. Use this important financial concept to meet your investment goals!
...There are people who get rich quickly. Some win the lottery. Some pick the right stock at the right time and are able profit from luck. But these examples are a minute fraction of those who plan their success through sound principles. Slow and steady wins the race in investment management.
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As founder of the Arbor Investment Planner my passion is to educate and empower the individual investors to manage their own investment portfolio.
The Arbor Investment Planner is a value investment portfolio management guide for those individual investors who choose to manage their own money. I focus on ideas and concepts important to the self directed investor; but put special emphasis on risk management, value investing strategies, and proper asset allocation and diversification.
- Ken Faulkenberry
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