📖John Templeton
Sell Discipline
Exit positions while optimism peaks, not after collapse.
The time to sell is before the crash, not after. Sell when optimism is at its peak and better opportunities exist elsewhere.
🏠 Everyday Analogy
📖 Core Interpretation
Having a sell discipline is as important as knowing when to buy.
💎 Key Insight：Selling into strength requires discipline and foresight, as it means leaving the party while others are still celebrating. Waiting for obvious signs of trouble means you are too late, as prices collapse faster than they rise. Monitoring valuation metrics, sentiment indicators, and technical deterioration allows you to sell when premiums are highest. The goal is to harvest gains before the crowd panics, not after.
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❓ Why It Matters
It's easy to hold too long out of greed or inertia. Discipline prevents giving back gains.
🎯 How to Practice
Set price targets. Monitor valuation relative to fundamentals. Compare to alternatives.
🎙️ Master's Voice
People who panic have a habit of selling at the bottom.
Templeton observed that panic selling locks in losses at the worst possible time. Those who can maintain composure during crashes not only avoid selling at the bottom but can buy from those who panic.
⚔️ Practical Guide
✅ Decision Checklist
- Am I panicking right now?
- Would I regret this sale in a year?
- Am I selling because of price or fundamentals?
📋 Action Steps
- Develop practices to manage panic
- Make selling decisions in advance, not during panic
- Use panics as buying opportunities
🚨 Warning Signs
- Selling during panic
- Making decisions based on fear
- Letting emotions override analysis
⚠️ Common Pitfalls
Selling too early in a bull market
Ignoring tax implications
📚 Case Studies
1
Tech Bubble Trim (1999)
Templeton reduced exposure to overvalued U.S. tech stocks as valuations became extreme in the late 1990s, selling into market euphoria.
✨ Outcome：Missed final phase of gains but preserved capital when the bubble burst, enabling later purchases at bargain prices.
2
Pre‑Crash Profit Taking (1987)
Ahead of the October 1987 crash, Templeton sold selected U.S. and developed‑market equities that had doubled or more, following his valuation and discipline rules.
✨ Outcome：Losses were limited during the crash, and cash raised was redeployed into high‑quality stocks at distressed prices.
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