Selling is the more difficult part of investing than buying. Holding on is even harder.
Phil Fisher had a philosophy around selling — or rather, not selling — that may be helpful to more than his stock-picking fans. But first, a little background.
Fisher was the original long term investor. He just did it in a very highly concentrated way, a side effect of his strategy.
He’s the guy that influenced Warren Buffett’s transition from Ben Graham’s buying companies at a wonderful price to his wonderful companies at a fair price. The key change was essentially paying a higher multiple (but still undervalued price) in exchange for a longer runway.
That last bit is key.
Fisher’s philosophy is built on finding the few companies that can grow at a sustainably high rate over long periods of time. While the typical Graham investment might have a holding period of a few years (1-3 years), Fisher’s was decades. Continue Reading…