In his latest podcast, Howard Marks explains what you should do when the stock you sold continues to skyrocket. Here’s an excerpt from the podcast
Marks: So let’s say there’s some stock and it’s been rising like a rocket ship, and you think it’s been overdone. You think it’s crazy. It doesn’t come close to justifying that price. You think it’s a clear sale, so you sell it.
It’s entirely likely that the factors and the energy that have caused it to be a rocket ship to date will continue in force for a while.
You may be right, but one of the first lessons you have to learn in investing is just because you’re right, doesn’t mean it’s going to work right away. And if you sell it today, there’s every probability that is going to go up tomorrow and the next day.
Your hope is that eventually you’ll be proved right and it’ll decline to a price lower than today’s. So as I say, if you dare to be different, even if you’re not wrong, there’s a good probability you’ll look wrong for a while. And you have to be able to live with that, and those things are not so easy.
You can listen to the entire podcast here:
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