When to buy, when to sell?

 

I must admit that I seldom read books all this while.

But thing starts to change from year 2020 (MCO time) onwards, where I have spent time reading a lot of stock investment books. In fact, I started investing since year 2009. However, I seldom spend time in looking for undervalued stocks, not to mention the methods to determine the intrinsic value of a stock. Therefore, my portfolio hardly grows before year 2020.

 

In 2020, I have read a book entitled “Value Investing in Growth Companies” written by Rusmin and Victor, which has inspired me a lot.

 

The basic (yet key) questions of any investor are:

 

When to buy a stock?

When to sell a stock?

 

Rusmin and Victor have put forward a very simple way to answer the questions above. That is, PUZZLE.

 

The decision to buy/sell a stock is dependent on the availability of 4 puzzles. 

These 4 puzzles are:

Business

(Is business doing good in long term?)

 

Management

(Is the management team capable and reliable?)

 

Number

(Is the profit growing? Cash flow good?)

 

Valuation

(Is it cheap? Buy at discounted price please.)

 

So…

Question 1: When to buy a stock?

Answer: The 4 puzzles above are intact.

 

Question 2: When to sell a stock?

Answer: Either one of the 4 puzzles is broken.

 

I will remind my daughters on these puzzles.