1. When to sell ? From BI Investment Club Operations Handbook
April 20, 2019 / Cincinnat Model Investment Club
Dene Alden
Cincinnati Model Investment Club

2. Disclaimer
The information in this presentation is for educational purposes only and is not intended to be a recommendation to purchase or sell any of the stocks, mutual funds, or other securities that may be referenced. The securities of companies referenced or featured in the seminar materials are for illustrative purposes only and are not to be considered endorsed or recommended for purchase or sale by BetterInvesting™ National Association of Investors Corporation (“BI”) or the National Investors Association, or the OKI Chapter Board. The views expressed are those of the instructors and do not necessarily represent those of BetterInvesting™, or OKI. Investors should conduct their own review and analysis of any company of interest before making an investment decision.
House cleaning on legal issues 2

3. APRIL IS FINANCIAL LITERACY MONTH
DID YOU KNOW?
APRIL IS FINANCIAL LITERACY MONTH
Senate passed Resolution 316 in 2003 encouraging outreach and educational goals for the public and private sectors aimed to help Americans improve their understanding of financial issues such as credit management, savings and home ownership.

4. Materials are taken from:
Chapter Eight of BetterInvesting Educational Series: INVESTMENT CLUB OPERATIONS HANDBOOK

5. NEVER!* WHEN TO SELL: *Warren Buffett’s theory is to
own stocks that you never need to sell! 5

6. Knowing when to “pull the plug” to
1. Count your profits 2. Cut your losses 6

7. Sell Action is a two-part decision:
1. Make the decision to sell the stock
2. Find a replacement:
Stock must offer less downside risk and greater upside potential 7

8. 1. Adverse Management Change
SELL SIGNALS:
1. Adverse Management Change 8

9. 2. Declining Profit Margins
SELL SIGNALS:
2. Declining Profit Margins 9

10. 3. Deteriorating Corporate Financial Condition
SELL SIGNALS:
3. Deteriorating Corporate Financial Condition 10

11. 4. Competition is Affecting Profits
SELL SIGNALS:
4. Competition is Affecting Profits 11

12. 5. Dependence On A Single Product
SELL SIGNALS:
5. Dependence On A Single Product 12

13. 6. A Stock’s Quality Will Change As Economic Circumstances Change
SELL SIGNALS:
6. A Stock’s Quality Will Change As Economic Circumstances Change 13

14. 7. Slow Growth Cyclical Stocks Need To Be Sold At Market Peak
SELL SIGNALS:
7. Slow Growth Cyclical Stocks Need To Be Sold At Market Peak 14

15. 8. Maintain Balance By Company “Size”: 25-50-25
SELL SIGNALS:
8. Maintain Balance By Company “Size”: 15

16. Summary Sell Signals: Radical Change in Management
Profit margins declining
Financial Condition (DEBT)
Competition
Single product
Economic circumstances
Cyclical
Balance of size 16

17. REASONS NOT TO SELL:
1. Price hasn’t moved. 17

18. 2. Don’t sell because of a paper loss.
REASONS NOT TO SELL:
2. Don’t sell because of a paper loss. 18

19. 3. Don’t sell because of a paper profit.
REASONS NOT TO SELL:
3. Don’t sell because of a paper profit. 19

20. 4. Don’t sell on temporary bad news.
REASONS NOT TO SELL:
4. Don’t sell on temporary bad news. 20

21. 5. Don’t sell just to take action.
REASONS NOT TO SELL:
5. Don’t sell just to take action. 21

22. SUMMARY of Reasons Not to Sell:
Lack of price movement
Paper loss
Paper gain
Temporary bad news
“Gota do something!” 22

23. “Buy and Hold” not “Buy and Ignore” Do the homework and have
SUMMARY:
“Buy and Hold” not “Buy and Ignore”
Do the homework and have
PATIENCE 23

24. LEARN THROUGH INVESTMENT CLUBS:24