It Doesn’t Always Make Sense To Sell High

Published on: 10/26/2021

In this edition of Chart Talk, Tony Ogorek and Jeff Viksjo discuss the value of patience by looking at the market performance from the beginning of the Financial Crisis in 2007 to today.

TRANSCRIPT

TONY:

Welcome to another edition of Chart Talk.  I’m Tony Ogorek and I am here with Portfolio Manager, Jeff Viksjo.  You know Jeff, a lot of people tell me there’s nothing wrong with taking profits.  Part of the reason is because it confirms their own native brilliance that they made the right call.  Typically, they do not like to sell their losers and there are a lot of behavioral and economic reasons for that.  However, let’s take a look at this chart which is very, very cool. It looks at market performance from the beginning of the financial crisis, in October of 2007, and moves forward to the present day.  See a couple of interesting stories, what do you want to talk about here?

JEFF:

So, winning mantra for investors has always been to buy low and sell high.  And here we are in 2021 and we are very close to another all-time high.  So the question is, should I be selling, should I be taking some profits off the table?  And this chart shows you, over the last 10-11 years since the great financial crisis, we’ve had 329 new all-time highs along the way.  So, if you sold at the first one, you’ve missed 328 of them.  And Tony, even if you look at COVID, that sharp decline, even if you were lucky to get out before that, you probably haven’t gotten back in, and you missed on a lot of upside.

TONY:

You know, it’s interesting Jeff, you look at a lot of the apps that are out there; Robin Hood, etc., etc., etc., and all the ads you see on TV and they’re just pushing trading, trading, trading, hyper trading.  And what this chart shows us is really the value of patience in the investment game.  And again, from the financial crisis if you look at it, it took 6-years before the market hit an all-time high.  If you threw in the towel after 5, just look at the ride that you missed.  So again, I think the key here is, it takes patience whether the market’s going down or whether the market’s going up.

Thank you for joining us for this edition of Chart Talk.

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