There's a quote that goes something like this, "Investing is like a bar of soap. The more you handle your portfolio, the less money you have." Today, you will learn how this quote closely applies to my personal buy and hold strategy. (I almost never sell stocks.) That said, sometimes I have had to sell. You will learn in today's investing video when I decide to sell a stock.
While I don't own any, I want to use Kraft Heinz (KHC) as the example in today's video. A lot of dividend investors own this stock and it has been in free fall. Many investors are wondering if they should sell. Learn how I evaluate whether to sell in today's investing video.
Worth noting, KHC just keeps falling:
* -27% Friday
* -2.1 % Monday
* -3.2% Tuesday
Whether it's KHC or another stock, here is my general framework when deciding whether to sell or not:
1) What type of investor am I? – I'm a long-term investor (buy and hold forever) so I'm ok weathering a storm.
2) Is the dividend cut temporary or permanent? – A complete elimination is a deal breaker for me.
3) Why did I buy it? – Was it based on my own conviction, or community-influenced.
4) Was there a fundamental change? – Businesses have cycles, I am ok with some changes.
5) Do I want to hold it forever?
6) Do I still feel good about it? Dividend investing is forever, and I need to feel good about what I'm owning. Otherwise, I will move on.
7) Better alternatives? Really difficult to tell. I like to diversify my stock portfolio.
8) Harvest for tax loss?
Today's dividend video also shares the following new investing criteria as well:
1) Did I buy the stock because a famous investor like Warren Buffett owns it? Very flawed logic, my humble opinion.
2) How much money is in the position? If a smaller position tanks, I don't really worry. If it's a huge holding, then perhaps I will scale it back.
3) Should I really worry about that dividend cut? A dividend cut is not a deal breaker for me. Learn why in today's dividend investing video.
4) Are we close to an inflection point? Should I wait to sell?
As a closing point, I discuss the difference between a high dividend stock like KHC and a fast dividend grower like HD.
Here's a Forbes article that talks about Warren Buffett's preferred shares on Heinz: https://www.forbes.com/sites/gurufocus/2018/01/10/buffetts-kraft-heinz-slips-to-near-lowest-price-in-a-year/
Here's an article about private equity and the role it may have played in the Toys-R-Us demise: https://www.theatlantic.com/magazine/archive/2018/07/toys-r-us-bankruptcy-private-equity/561758/
Here's an urgent stock market update on KHC: /watch?v=3yiQ1EQvib8
Here's my original video on why KHC stock is not for me: /watch?v=wlwjN8tjY3c
Here are my top 5 investing mistakes: /watch?v=nC-pQ56FlK4
Here is my when to sell framework with GE as the example: /watch?v=_OGNjQndkfM
Here's a video from when I sold my DPS stock: /watch?v=v8npn2NqbzA
DISCLOSURE: I am long General Mills (GIS), Campbells Soup (CPB), 3M (MMM), and The Home Depot (HD). I own these stocks in my stock portfolio.
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