VALUE: After Hours (S07 E23): Selling, Round-Trips, and Behavioral Tactics

During their recent episode, Taylor, Carlisle, and Zeke Ashton discussed Selling, Round-Trips, and Behavioral Tactics. Here’s an excerpt from the episode:

I’ll just share one of them with you just because I think it might be instructive for some people is I have a terrible fear of round tripping ideas.

So, I have friends that say, “I round trip stocks all the time.” I’m like, “I have almost never round trip to stock.” [Jake laughs] What I have done though is made a nice double in five years and sold only to watch that stock go up five times in the next 10 years. Or, sold and made a nice 30% return in 8 months or 12 months or 15 months, and then watch the stock continue to go up for a good while after that.

And so, I think that it’s very interesting that depending on how you’re wired, what I recognize though is this fear of having a stock round trip on me was probably keeping me from staying in longer as long as I should. What I decided to do was where I would normally start getting the temptation to sell the stock and maybe even the entire position, I make myself sell a little tiny bit of stock just to satisfy that urge, and then go sleep on it and then see how I feel the next day.

What I found is that even just doing a small action that may not have a material monetary sort of thing, it was a psychological release valve for me. And it enables me to then stay with it, because even if it does round trip all the way, I’ll have clipped this little tiny bit of profit. And so, I don’t know if you guys have any similar– [crosstalk]

Tobias: What about on the other side? Do you have a mirror to that where you say, “I like this stock, but it’s too expensive probably. So, I’m just going to buy like a fractional position, like less than a percent, just so I can keep an eye on it”? Do you ever do that?

Zeke: No, I don’t buy a stock that I know is overvalued or I believe is overvalued. I will now take a starter position in a stock before I have reached this 100% clarity that we don’t have the 30-page internal document that we normally would like to have/ Because sometimes when you’ve spent, I don’t know, 50,000 hours doing this, at some point you go, “Look, I’ve got to have learned something in that time. I know all the major pieces are there. Let me get started on it.” And so, I will have 1% or 2% starter positions, and then just try to get smarter and learn more about that stock as time goes by.

Whereas in the past, I would not even buy one share until I knew exactly what I thought that stock was going to be for me. I don’t know if that’s a big difference either, but that’s a little thing that I will do. But no, I still have not yet brought myself to say, “Oh, I need to own this stock even though it’s overvalued.” [crosstalk]

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VALUE: After Hours (S07 E23): Selling, Round-Trips, and Behavioral Tactics

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