I recommended buying Unilever after it dipped following Kraft's withdrawal of their takeout offer: http://ift.tt/2mL8Wwb
It has since risen 10% in a short period of time, something I did not and do not claim to have foreseen. What to do with the shares now?
The tempting thing to do is sell and claim a nice short term 10% profit. However this kind of behavior is precisely a weakness I have identified in my investing strategy - I have tended all too frequently to sell my winners too early. Below is a light summary of my thought process in whether or not to sell.
How to decide whether or not to sell at this point: It's easy for me this time. Because my investment thesis was as a long term growth play, there is no reason to sell the stock unless one of two things happen:
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Earnings growth stagnates.
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The valuation gets out of whack.
Because none of these have occurred, I see no reason to sell.
If on the other hand I had purchased with the idea of it being a value stock valued, say, 15% lower than intrinsic value, then I would be heavily inclined to sell. It would not be unreasonable to hold for the extra 5% but on the other hand, selling would be the natural conclusion to the investment thesis.
As always, happy investing, and do your own due diligence.
Submitted March 10, 2017 at 11:27PM by linlaoda http://ift.tt/2mu8K27
