Sell Discipline

The decision to sell all or part of a security requires as much thought and research as went into purchasing the security to begin with. Our decision to sell a security occurs for the following reasons:

Valuation... Each company in our portfolios is assigned a fair market value, based on our analysis of the company's financial statements. As the company's stock price begins to approach our estimate of "fair value", we will begin thinking of selling all or part of that security. Income tax considerations for each client will also enter into our thinking as to the timing of the sale.

Eroding Fundamentals... If our research leads us to believe that a company's competitive position has been impaired due to an increase in competition, product obsolescence, or poor management, we will sell all or part of that security.

Upgrading Quality... A company believed by us to be undervalued could still be sold if an investment in another company that has better fundamentals presents itself. The new company may have a superior competitive position to the one being sold, a better management team, and a stock price with a greater degree of undervaluation.

Position Weighting... A portion of a security may be sold if it becomes too large a position, on a percentage basis, in a client's portfolio. The particular client's income needs and risk tolerance will enter into our thinking on this matter.

Flawed Research... We tend to be our own worst critics. If we believe we've made a material error in our assessment of a company's prospects, we will not hesitate to admit our mistake and subsequently sell the security.