During his recent fireside chat at the Ben Graham 10th Annual Conference, Tom Gayner explained why you should never be in a hurry to sell. Here’s an excerpt from the chat:
Gayner: Sell well, I tell the story about my grandmother, and if some of you know me, you might have heard this before, but my grandfather died in 1966, and he was a small town businessman. And in those days, small town business people oftentimes had individual portfolios of stocks, and they would go to the diner and drink coffee and talk about them and whatnot.
And my grandfather was one of those kind of people, and they had twelve or thirteen stocks. Nice, middle class, sort of small town businessman. Well, my grandmother was the kind of person who basically, after he died, she never made another substantive decision for the rest of her life. For 30 years, lived in the same house.
His suits hung in the closet, his shoes were on the floor. And those twelve or thirteen stocks that my grandmother inherited from my grandfather, she kept. Now as a kid, nerd interested in the stock market, I will tell you on a Friday night when I could not get a date, on more than one occasion, I would sit with my grandmother and we would watch Wall Street Week with Louis Rukeyser and talk about things.
And my grandmother was not an unsophisticated woman. She graduated from Swarthmore College in the 1920s, just kind of ahead of its time. Was a teacher for many years, a professional career woman. The very first paycheck she ever got, she used to buy a fur coat. She got a motorcycle burn by being on the back of somebody’s motorcycle in her 80s.
So this is a fascinating woman, but she didn’t sell anything, fortunately. And I was four when my grandfather died, so I didn’t really know him or have any memory of it. But somehow or another, among those twelve or thirteen stocks he owned, one of them was Lockheed Martin and another one was PepsiCola.
Well, guess what? The other ten stocks in the portfolio could have gone to zero. And it didn’t matter. The math of your winners compounding over time. And earlier there was a discussion about short selling and sort of the upside down math of getting some wrong. Imagine being short Lockheed Martin or Pepsi.
That would be a really bad thing. Wipe you out. Well, the good news is being long is the exact opposite of that. It kept my grandmother in a pleasant middle class lifestyle for the rest of her life. So it’s not that I never sell anything, but really slow to sell sometimes to the frustration of my colleagues or some are.
You can watch the entire discussion here:
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