This Is How You Know It's Time To Sell Your Stocks | Ep. 21

Episode Overview

• The hosts provide updates on their personal portfolios, with one approaching the $100,000 mark and the other contemplating a significant decision to sell his long-held position in Altria (MO).
• The discussion explores the psychological pressures of investing, including the "sell bug" phenomenon where the mere thought of selling a stock can create an overwhelming internal conflict.
• A viewer question prompts a deep dive into optimal long-term investment strategies for children, leading to a strong recommendation for growth-focused ETFs over stable dividend funds.
• The conversation concludes with broader themes of portfolio simplification, the benefits of a concentrated strategy, and the importance of aligning investments with personal ethics and goals.

Key Concepts

• Portfolio Management & Goal Setting: The hosts share personal portfolio milestones ($100k and $265k) and articulate ambitious future financial goals, framing the discussion around active management decisions.
• The Psychology of Selling: A central theme is the "sell bug," an internal conflict that arises once the thought of selling a stock takes root, often leading to a sale regardless of the company's fundamental quality.
• Strategic Alignment: The conversation highlights the importance of ensuring every stock in a portfolio fits an investor's current strategy and goals, even if the company itself is performing well.
• Ethical Investing: The moral considerations of owning "sin stocks," specifically tobacco companies like Altria, are explored as a valid and powerful reason for divesting from a position.
• Long-Term Investing for Youth: The episode provides a detailed analysis of the appropriate investment strategy for children with a multi-decade time horizon, emphasizing growth and total return over dividend income.
• Growth vs. Dividend Strategy: A contrast is drawn between growth-focused ETFs (like VGT or S&P 500 funds) for accumulation phases and dividend-income funds (like SCHD) for retirement phases.
• Portfolio Simplification & Concentration: The benefits of reducing the number of holdings are discussed as a way to achieve a deeper understanding of each investment and combat "investor ADHD."

Quotes

• At 1:37 - "Next year is going to be my million-dollar year." - Ari reveals a bold statement he made to the Blossom community about his financial goals for the upcoming year, combining career moves and investing.
• At 2:10 - "We're just like inching closer and closer to that elusive $100,000 mark." - Ryan shares his own portfolio milestone, noting he is getting very close to a six-figure valuation.
• At 4:09 - "I've owned Altria pretty much... ever since I got into investing. I think Altria was one of the first positions that I bought." - Ryan provides context on why selling Altria would be a significant decision, as it has been a core holding since he started investing.
• At 4:36 - "What even prompted the thought to get rid of it?" - Ari questions Ryan's surprising consideration, highlighting that selling a stable, high-yield stock like Altria seems out of character for his strategy.
• At 20:18 - "'I think anytime you catch that sell bug, it just eats away at you until you actually sell it.'" - Ari explains the psychological phenomenon where the idea of selling a stock becomes an overwhelming, persistent thought.
• At 21:34 - "'That volume is just going to get turned up and it's going to be like, 'Sell! Sell! Sell!'" - Ari predicts that his co-host's internal voice telling him to sell his stock will only become more insistent over time.
• At 22:25 - "'That's what makes investing so fun, to me. Like, I have fun thinking about this stuff and toiling over these decisions.'" - Ryan explains that he enjoys the intellectual challenge and deep thinking required for active investing.
• At 25:06 - "'It's ignorant to smoke. Can I just say that? Like, outright? We know that it causes cancer.'" - Ari expresses his strong personal and moral stance against smoking, which prevents him from investing in tobacco companies.
• At 44:24 - "That the barrier to entry is the cash." - Ryan explains that the primary advantage of large tech companies is their immense cash flow, which funds the R&D needed to stay ahead.
• At 46:04 - "What are you doing? I mean, you're playing so safe with a... custodial account... This is the exact time where you should be like VGTing it or even just the S&P." - Ari expresses his strong belief that a growth-focused strategy is far more appropriate for a child's long-term portfolio.
• At 48:13 - "I'm always saying, you know, if you're not looking to actually retire early and live off your dividends, then you probably have no business in an SCHD type of fund for decades." - Ari clarifies his view that dividend-focused funds are primarily for those approaching or in retirement.
• At 57:13 - "The less number of holdings you have, the deeper you can go with each holding. And that's what gives you the best of both worlds, I think." - Ryan argues that a concentrated portfolio allows for a more thorough understanding of each investment.

Takeaways

• Prioritize total return for long-term horizons; when investing for goals decades away, focus on maximizing overall growth with broad market or growth ETFs rather than seeking dividend income.
• Recognize and act on the "sell bug"; if persistent doubt about a stock arises, it may be more productive to sell the position to clear your mind and reinvest with conviction.
• Ensure your holdings align with your current strategy, not just their past performance, by periodically re-evaluating if each investment still serves your evolving financial goals.
• Incorporate personal ethics into your investment decisions, as excluding companies that conflict with your moral values can strengthen your long-term holding discipline.
• Use dividend funds strategically for income generation near retirement, not as a primary vehicle for long-term wealth accumulation.
• Simplify your portfolio to deepen your conviction; a concentrated portfolio with fewer holdings allows for more thorough research and helps avoid impulsive, unfocused decisions.
• Set clear and ambitious financial goals to provide motivation and create a tangible benchmark for success in your investment journey.