Turnout Tuesday: Selling Better?

Our Turnout Tuesday series will feature a number of guest presenters with topics of interest to long-term investors.

Ken Kavula and Mark Robertson will provide an encore presentation to kick off this series by talking about traditional, time-honored reasons to sell stocks. They will then extend their discussion to new selling triggers which might be helpful in limiting downside. This whole concept is a work in progress and you will see how the two guys create a thesis and then begin to test the model. They have been working on this idea for almost a year and are beginning to use parts of it to manage a tracking portfolio associated with the Mid-Michigan Round Table program. Do these new ideas really work? Only time will tell but it is one of the more interesting ideas that Mark and Ken are presently debating and testing.

In this Turnout Tuesday webinar, Ken Kavula and Mark Robertson from Better Investing Mid Michigan Chapter and Manifest Investing presented an educational session on selling strategies titled "Selling: Preserving Capital and Capital Gains." The speakers emphasized that they are not changing Better Investing's core philosophy but rather exploring new triggers and tools to help investors make better selling decisions. They highlighted the common investor challenge of following stocks to record highs and then all the way back down without a clear decision point, and introduced the concept of using portfolio management techniques to protect both capital and capital gains. The presenters reinforced the three traditional reasons to sell—needing the money, quality degradation, and making the portfolio better—while introducing a framework that treats core holdings (high-quality, long-established companies) differently from non-core holdings (speculative or early-stage companies with shorter track records).

A key distinction presented was that core holdings should be evaluated against money market rates (near zero at the time), while non-core holdings should have higher return expectations aligned with market averages (approximately 7% PAR). Kavula explained that non-core holdings include not only speculative stocks but also companies that are difficult to analyze using the Stock Selection Guide (SSG), such as Amazon, Facebook, Nvidia, Exxon Mobil, and BP Petroleum. The speakers referenced historical Better Investing principles, particularly Rule 1 from the 1984 Investors Manual, which states that selling should occur when an issue of equal quality offers better gain prospects with less risk. They demonstrated their approach using tracking portfolio examples, including the Panera Bread holding, to show how they measure investment performance relative to market returns and make data-driven portfolio decisions.