Galatians 5:22-23 (ESV) – “But the fruit of the Spirit is love, joy, peace, patience, kindness, goodness, faithfulness, gentleness and self-control. Against such things there is no law.”

Star Trek! I used to watch Star Trek as a teen and enjoyed the character known as Mr. Spock. Spock lived a life of analysis and logic and he had no emotion in his decision-making process.  When the Enterprise was attacked, he was always a thoughtful officer on the deck. He had self-control.  He was patient.

Determine Your Course Before You Start Flying

When it comes to buying and selling investments, far too many nervous investors have emotions driving their star-ship. They let greed and the thrill of quick wins drive their buying behaviors.  They allow fear, anxiety or false optimism to control their sell behaviors.  It is far better to determine what will drive you to sell an investment before you buy it. Knowing this as a starting point helps you understand your exit point.  Let me suggest that few of your investments should result in a panic-driven exit. The best way to build a good foundation for your buying and selling activities is to think about why you will buy and why and when you will sell. What are your rules?  Write those rules down.

Even if you think you will remember your rules, it pays to have them in writing. Let me start by sharing my reasons for selling. In a future blog post I will give my rules for buying an investment.

Wayne’s non-emotional navigation system for selling an investment – are any of these “yes?”:

  1. Has the long-term prospect crashed? (Remember to buy with a long-term, owner’s perspective.)
  2. Did the company cut, freeze or suspend its dividend? Why?  This is rarely a good sign. Is the ship in danger of crashing?
  3. Has the greed of others become irrational so that the investment’s valuation is now in the stratosphere? Perhaps it is time to sell a portion of the investment and reinvest that portion elsewhere.
  4. Did the size of the investment grow to more than 4% of the total investment portfolio? Is this part of your entire ship getting out of balance?
  5. Is this industry facing huge obstacles in the future? For example, is coal mining a dying industry now that we have dilithium crystals to power the star-ship?

Note what is not in this list: There is no mention of an over-all market correction.  There is no mention of a 30% drop in the value of the investment.  Perhaps a drop of 50% would be a motivator, but a diversified portfolio of quality investments should not see too many of those. Chart your course carefully.

Wayne L Winquist, Captain of the Winquist Enterprise