When to trim, sell, and exit — the other half of the decision.
7 modules
A thesis is broken when the specific reason you bought no longer holds, not when the price falls.
Worked example: A camera maker overtaken by the smartphone — a thesis genuinely broken
When you are down, the thesis decides whether to exit or add — never the size of the loss.
Worked example: Averaging down into a falling knife — doubling the size of a mistake
Sell on the gap between price and value, not on the size of your gain.
Worked example: A great business at fifty times earnings — the lost decade for holders
Sometimes you sell not because anything is wrong, but because a winner grew too big for your own rules.
Worked example: A winner that grew from five to eighteen percent — a trim for concentration, not for value
Selling a compounder to lock in a gain truncates the unbounded upside that makes a portfolio.
Worked example: Selling a compounder after it doubled — the upside left on the table
Owning something makes you value it more — which quietly sabotages every sell decision.
Worked example: The position you would never buy today — but cannot bring yourself to sell
Write the conditions that would make you sell at the moment you buy, while you are calm and unbiased.
Worked example: Two investors in the same crash — one had written rules, one did not