The idea is to buy low and to sell high, but how do you know when low is low and high is high?
This is why I calculate an intrinsic value to which I compare to the current price to obtain an expected rate of return. I will consider investing when the expected rate of return exceeds 15%. I will consider selling when the fundamentals of the company deteriorate.
Depending on the reasons for movement in a stock’s price, some buy or sell signals may be dismissed when considering the company, the industry, and the economy. It could be a good company with a minor setback for whatever reason.
I look for companies that dominate or will soon dominate their industry and wait for an acceptable price that yields an adequate return.
I am a long-term investor with a typical holding period of 3 to 10 years.
A typical portfolio will own 15 to 20 companies when fully invested. Cash levels are dependent on investment decisions and asset allocation decisions.
Portfolios are monitored to reflect any new information coming to light in relation to the company, the industry and the economy. Adjustments are made to the portfolio according to changes in the market environment.