The three reasons to sell, and the one that is not on the list
Most selling decisions are made for reasons that would not survive being written down beforehand. Writing them down beforehand is the fix.
Buying gets all the attention. Most of the avoidable damage in a portfolio happens on the way out.
Reason one: the thesis broke
You owned the business because of something specific — a durable advantage, a margin structure, a reinvestment runway. If that specific thing has changed, the reason to own it is gone. This requires having written the thesis down, which is why most investors cannot use this reason.
Reason two: the price left fair value far behind
A business can be excellent and still be too expensive. If the price now assumes growth the company has never delivered, the risk has shifted regardless of quality.
Reason three: something better appeared
Capital is finite. Selling a position with a 6% expected return to fund one with a 14% expected return is a decision about opportunity cost, not a judgment that the first business is bad.
The reason that is not on the list
The price went down.
A falling price is information about what other people will pay today. It is not, by itself, information about the business. If the thesis holds and the valuation still makes sense, a lower price is either irrelevant or an opportunity — but it is not a reason.
The stock does not know you own it.
Common questions
Should I sell if a company fails a pillar it used to pass?
Not automatically. A changed pillar verdict is a prompt to re-read the thesis. Ask what changed in the business, whether it is temporary, and whether the reason you bought still holds.
How long should I hold a stock?
As long as the thesis holds and the valuation remains sensible. Time is not the variable that matters — the business and the price are.
Paul Gabrail
Founder
Founder of Everything Money. Former commercial real estate investor who has spent two decades analysing businesses for his own account.