In The Little Book of Sideways Markets, investment manager Vitaliy Katsenelson makes the case that a long-term buy and hold approach is a way of the past; buy and sell is the new strategy for investors looking to gain sufficient returns over time.
Katsenelson is not a day-trading speculator. He is a value investor who is advocating the importance of seriously assessing when to sell a stock – a topic which too few value investors have ventured to discuss in-depth.
Buy and Sell is the New Buy and Hold
Katsenelson makes a strong point for why a disciplined sell strategy needs to be a vital part of any investor’s portfolio management.
By analyzing historical market-valuation rates and the current state of the global economy, Katsenelson claims cyclical bull markets will continually be succeeded by cyclical bear markets, ending in long-term sideways markets.
In these environments, “a proper sell discipline will make the difference between great or mediocre returns for even the best-crafted buy decisions.”
Quality, Value and Growth
Do not misunderstand, The Little Book of Sideways Markets is not all about selling. The book focuses a great deal on the importance of buying high-quality growth companies at large margins of safety – what he calls QVG (Quality, Value and Growth.)
Value Investing principles are littered throughout the text.
The Little Book of Sideways Markets
Katsenelson’s humorous use of analogies turns a topic that can be gruelingly tedious into an enjoyable and easy-to-follow read.
For example, his story of Tevye – a farmer trying to determine which cow at the auction will produce the most profit – brilliantly explains the concept of discounted cash flow and the importance of investing with a margin of safety.
Individual investors at any level will find The Little Book of Sideways Markets thought provoking and informative. Whether it is the first or 101st investing book you read, you will be educated and entertained.
This article appeared first on The Stock Market Blueprint Blog.
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