For most investors, the focus is often on finding the right stock, entering at the right valuation, and identifying the next multibagger. Far fewer spend time understanding what may be the more difficult aspect of investing—knowing when to sell.
Speaking at the ET Alpha Wealth Summit on Thursday on "The Art of the Exit," Rajiv Thakkar, CIO and Director at PPFAS Asset Management said that successful investing is not just about buying well but also about staying invested long enough for compounding to work.
In fact, before discussing reasons to sell, he spent considerable time explaining why investors should avoid selling in the first place.
According to Thakkar, one of the biggest mistakes investors make is selling because a stock has not moved for a few months.
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Investors often spend significant effort researching a company, understanding management quality, assessing industry prospects and evaluating valuations. Yet after purchasing the stock, many lose patience if prices remain stagnant for six months or a year.
