From Buy to Bye: Sell Discipline and Overcoming Behavioral Biases | EP.159

Art of Boring

In this episode, Portfolio Manager Jeff Mo discusses common behavioral biases that can hinder clear sell decisions, and the tools, such as checklists and trigger points, that can help slow down emotional thinking. He provides examples of companies that he and his team properly exited based on changing fundamentals as well as those they may have held onto for a bit too long, proving the power of the endowment bias. Key points from this episode:

• Mawer’s sell discipline mirrors the inverse of its buy criteria: wealth creation, management quality, and discount to intrinsic value.
• The endowment bias makes it difficult to sell stocks you already own; try to always consider your holdings, and don't get married to them.
• Valuation is not the most important plank of Mawer’s sell discipline framework. Wealth creation and excellent management teams come first.
• While some believe the worst sell misses are the ones that have gone down considerably, Jeff believes the worst ones are actually the ones that go nowhere.
• It is important to weigh the inductive evidence a little bit more than the deductive evidence, but this can be difficult to do when it's a company that has done well.
• Warren Buffett once said that the preferred holding period is forever. However, not everything in life goes as you’d prefer, and that’s where sell discipline comes into play.
• Checklists and trigger points are a great way to think systematically and to slow down the process, helping take the emotion out of sell decisions.

Host: Rob Campbell, CFA, Institutional Portfolio Manager Guest: Jeff Mo, CFA, Portfolio Manager For more details and full transcript visit: https://www.mawer.com/the-art-of-boring/podcast/from-buy-to-bye-sell-discipline-and-overcoming-behavioral-biases This episode is available for download anywhere you get your podcasts.

Founded in 1974, Mawer is a privately owned independent investment firm managing assets for institutional and individual investors. Mawer employs over 250 people in Canada, U.S., and Singapore. Visit Mawer at https://www.mawer.com. Follow us on social:

Twitter - https://www.twitter.com/Mawer_Invest

LinkedIn - https://www.linkedin.com/company/mawer-investment-management/ Instagram - https://www.instagram.com/mawerinvestmentmanagement/