when to sell

With the stock market at record highs, I thought we could take a lesson from the state of the Philadelphia Phillies organization.

Given that the Phillies are seemingly full of superstars, why are they struggling? The answer is pretty apparent. Most of their stars are now past their prime. This has created a triple threat to the immediate and future success of the franchise.

First, the team is not as competitive as it once was with the same players against younger and more talented teams. Second, the veteran superstars command higher than average salaries which makes it hard to sign new players. And third, the trade value for these players is significantly less than it was a few years ago.

So what is the lesson to be learned? It is better to trade a star player a year too early than a year too late.

Like investments, it is very hard to judge when a star athlete has hit their peak.

Like investments, players’ declines can start suddenly and they can lose their value rapidly.

Like investments, once the decline has started, it can be very difficult to realize full value for the athlete either through a trade or performance on the field.

Like an investment, once the decline begins, how fast or how far the value of an athlete will fall is hard to predict.

Finally, investors like fans never want to let go because they are so vested in past performance instead of future results.

As investors, the lesson we can learn from the struggling Phillies is this…

“it is better to trade a great player a year too early than a year too late”
or
“it is better to sell a winner a few points too early than a few points too late after it has reached its peak in value”.

If you want to talk more about some of the investment lessons we can learn from the Phillies, please give our office a call at 215-968-1755.