Investors with real mettle are as good at selling assets as buying them.
Joshua Derrington, Chief Investment Officer
2nd January 2025
Breaking up is hard to do, and when it comes to parting ways with a beloved investment, selling can be just as tough.
But knowing when to sell, and having the discipline to act, is one of the most underappreciated skills in investing. Done well, it can make the difference between protecting hard-won returns and watching them vanish.
Most investors obsess over what to buy, pouring hours into projections and technical analysis. But when it comes to selling that discipline often disappears.
Decisions become reactive, emotional, or in the worst case, deferred entirely. It’s an oversight that destroys more wealth than most care to admit.
I’m a firm believer in a simple truth: the discipline to sell is as important as the decision to buy.
For me, every sell decision starts with a clear process and there are three reasons to sell.
Take Novo Nordisk as an example. It was one of our standout holdings in 2023 – global leadership in diabetes treatments, paired with investor enthusiasm for its weight-loss drug, Ozempic, made it a market darling.
By late 2023, the thesis had mostly played out. Sentiment had driven valuations well beyond what we considered reasonable, and the upside had all but evaporated.
We exited later in 2023, locking in strong gains. Since then, the share price has stagnated, reflecting the stretched valuations we identified.
Another example is South32, a diversified miner we exited in early 2022. While South32 had served us well, we recognised that its near-term growth catalysts were largely priced in, and the risk-reward equation had shifted. The broader macro backdrop for commodities was becoming more uncertain, and valuations no longer justified holding the position.
Since our exit, South32’s share price has struggled to gain momentum, reflecting the very risks we sought to avoid. Investors who remained exposed have faced negative returns over the past two years, while we redeployed that capital into higher-conviction opportunities.
The point is this: holding on for emotional reasons or anchoring to past gains is dangerous.
The market doesn’t care what you paid.
Two of the biggest emotional traps in investing are the fear of loss and the fear of missing out (FOMO).
For instance, we’ve seen investors hold stocks like Apple (which we sold in early 2022 – too early in hindsight, but that’s investing) far beyond what we deem reasonable valuation levels, simply because “it’s Apple.” That kind of emotional attachment can undo years of disciplined work.
Many investors struggle with challenging their own positions, often falling into the psychological trap of confirmation bias, favouring information that supports their existing views.
The best defence against emotional mistakes is regular, critical portfolio reviews. Each holding must earn its place in the portfolio.
Ask the tough questions, such as:
If the answers don’t stack up, sell – no excuses.
This kind of disciplined scrutiny sharpens our decision-making and ensures we aren’t just passengers in a momentum-driven market. Investors who ignore this risk unknowingly drift into dangerous waters, riding market trends without a clear plan for when to exit.
Investing isn’t just about what you own – it’s about what you don’t own.
Make no apologies for walking away. There is no room for protecting entrenched positions on a spreadsheet. Success comes from relentlessly scrutinising one’s own convictions, exposing blind spots, and making tough but necessary adjustments.
Selling isn’t about admitting defeat; it’s about managing risk, freeing up capital, avoiding complacency and having the conviction to act.
The best investors know when the party’s over, and they’re not afraid to leave.