When to sell excellent technology companies

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Philip Fisher, mentor to many growth-oriented investors, concentrated on technology companies with excellent long term potential because they had developed teams of people who could continuously innovate and thus be one step ahead of competitors. When buying he asked questions like,

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  • Are the people running a firm outstanding?
  • Does it hold a strong competitive position?
  • Are operations and long term planning handled well?
  • Are there enough high potential new product lines for growth to continue for many years?

If he got a yes to all his questions, and the shares were trading at a reasonable price, he would buy.

So long as the quality of the people in the organisation and the competitive position did not deteriorate his advice of selling shares in this type of company was succinct:  almost never.

Fisher however did occasionally sell stocks, for two main reasons;

  • Firstly, when an error had been made in the original assessment of the company, and the company factors were less favourable than supposed. In this case it is vital that the error is recognised and corrected quickly, and that the investor has the honesty and self-control both to accept that he/she is fallible, and also to learn from the misjudgement.
  • Secondly, there...To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

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