Sell When They Want to Buy; Buy When They Want to Sell

Investors know that it’s always easier to sell a stock when it is going up--the more people who want to buy your stock, the better the price. I also strongly believe that it never pays to be greedy when it comes to the stock market. There is an old Wall Street saying, “Bulls make money; bears make money but pigs get slaughtered.”

Investors who consistently pursue a bullish long-term strategy can make money, as can investors who consistently apply a bearish strategy. The investors who do poorly--i.e. “get slaughtered”--are those who are greedy and who always chase the hot stocks or hold onto stocks too long.

You will almost never be able to sell a stock at exactly the right time--just as it peaks and starts to go down. If you try to do that, more often than not you will find yourself selling just as everyone decides to sell too and the price is falling like a rock. All of this said, selling is rarely easy.

In fact, I generally find selling much harder than buying. It is frequently pretty easy to spot a stock that is undervalued, but you may have to wait a while for other investors to realize how cheap your stock is and bid it up. If you’ve done your analysis correctly though, they eventually will. I often find it difficult to determine when a stock is getting fully valued. When a stock is rising, that usually means that there are a lot of smart people who have good reasons why they think it will go much higher still…and they may be right--for a while.

That is why we often recommend selling stocks that are performing very well. One of the keys to making money in the stock market is being content with taking solid profits--and leaving the pigs to fight over the last few points. 

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In nearly every case, the shares of a company in bankruptcy become worthless. In very rare cases, however, they can become great investments. W.R. Grace (NYSE:GRA) shares produced a 75-fold return, as an example. With California utility PG&E (NYSE:PCG) now in bankruptcy, the range of possible outcomes for its equity is wide.

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In reading recent editions of The Turnaround Letter, you have probably noticed that we are increasingly using EV/EBITDA as a valuation measure, rather than the better-known price/earnings multiple.  We thought it might be useful to describe this measure and why we like it.

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Turnaround Letter Stock Pick Named Top Performer of 2017


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What Last Year's Top Stock Pickers Are Buying in 2018


This Forbes write-up follows up on the recent Top Stock Tips report--naming The Turnaround Letter's Crocs recommendation the top performer of 2017: With 90% gains, CROX beat out 100 other investment ideas included in the report; and the stock continues to have value investing appeal, according to Putnam.


George notes, "We see additional upside for the stock in 2018 as management's efforts continue to bear fruit, though the gains will likely be more muted than we saw in 2017."