When to run to Emergency Exit

When you chose to invest in a company because it fits all your investment criteria you should never forget to define an exit policy too.

What is an exit policy?
It is the selling signal that tells you that is time to sell your stocks.

Why is it so important to well define the exit policy?
Because avoiding emotions in Stock Exchange is a key thing to be successful. And if you do not decide when to sell a stock at the exact moment you are buying it, you can risk to take decision in future that are linked to your feelings and to your emotions and not based on rational procedure.

Everyone should decide an own exit policy according to his own investment way and strictly follow these rules if you want to be a great investor. That does not mean that one winning policy exists, different persons have different investment attitudes and according to this attitude can design and set up the exit signal. For a technical trader the exit signal is as a buying signal the moment while some indicators make particular figures or crossing, for other types of investors could be macroeconomics signals or trends, for other are just the companies’ financial decisions.

The important is To Have an Exit Strategy. It’s up to you define your own.

After the last months Stock Exchange has been falling down, a lot of people have been selling stocks in fears.

At Value Finance we have just keep analysing the company we have stock in, looking at their management, their selling skill, their strategies, the indicators we are looking at when we buy them and if everything is keeping to be the same, why the hell we should sell? Are we going to sell the stocks in a wealthy company just because the stock exchange is in his depressive period? Will people stop use Visa’s credit card to buy food? Will people stop to use E.On energy to light on their house? Will E.On stop buying Areva’s reactors to feed energy demand?

I do not think so.

The depressive or excitement phases of the Stock Exchange do not mean anything for me.
Value Finance Portfolio has a long term value investment approach and focus on the companies’ value: assets, sales, goodwill, intangible advantages, management capability, etc. If something changes in these key figures: then the Selling signal can occur.