Breakfast News: Selling Is an Art. Your Art.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

A quick note before we begin: Today's Breakfast News is a special edition since markets are closed for Labor Day. Regular service resumes tomorrow. Fool on!

We recently asked what your first instinct is when a stock you own doubles. Almost half of you said hold and stay the course. With CrowdStrike (NASDAQ: CRWD) we announced something in between -- that we will be selling a portion (15%) of our stake, which had grown into the largest holding in the Epic Portfolio .

Our proprietary Potential Growth Indicator sits just above 10% and keeps sliding. CrowdStrike's stock trades near 36 times forward sales (not earnings – sales !). The market has priced it for perfection, and AI cuts both ways for cybersecurity.

But we still believe in the business, and it still belongs in the portfolio (indeed, it will remain among our largest Epic Portfolio positions). We just want less of it at this price, in this market, at this size.

Tom and David Gardner gave us the cleanest sell rule in The Motley Fool Investment Guide : "When you find a better place for your money, put it there." It's a great rule. It's also one of many. An investor may wisely sell for all kinds of reasons:

A winner grew into an uncomfortably large slice of the portfolio.

The price outran the business, leaving no room for a stumble.

The thesis broke. The moat, the management, or the market changed.

The investor never understood the company well enough to hold through a 40% drawdown.

Life needs the money: tuition, a medical emergency, a down payment, retirement income.

There are so many other reasons. Also, please notice how these reasons often have very little to do with the company. Selling is less formula than judgment. Thoughtful investors reach different judgments from identical facts.

💡 Epic Portfolio principle: Write your sell rules before you need them.

Your selling discipline has to be yours, and it should exist on paper (or screen) before you need it. In the moment, you'll be reacting to a price rather than a plan. So write down three things for every position: why you own it, what would make that reason untrue, and how large you'll let it grow. Revisit once a year.

If you do that, a "trim" alert becomes information rather than instruction. Some members will sell 15%. Some will sell none. Some will sell more. Every member's situation is different. Selling is an art – your art. The investor who knows why they're selling has already done the hard part.