I know the 'S' word is taboo in this sub, but I have been re-evaluating my portfolio and I'm struggling with the decision-making framework around selling positions that are down significantly.
A few years into investing, I've accumulated a number of smaller positions. Some are down 20-30%, some much more. One example is Adobe, which is down materially from my cost basis. The company isn't bankrupt, still generates cash flow, and there is a reasonable argument that the business will continue to exist and grow. However, I'm increasingly questioning whether that alone is a sufficient reason to hold.
The debate in my head is:
**Camp 1:** Don't sell unless the original thesis is broken. Ignore the cost basis, focus on whether the business is still fundamentally sound, and give management time to execute.
**Camp 2:** Opportunity cost matters. Even if the thesis isn't broken, capital is limited. If I can identify businesses where I have materially higher conviction, it may make sense to redeploy rather than wait years for a recovery.
What makes this difficult is that some positions would need very large percentage gains to get back to my original investment. At the same time, I know anchoring to my cost basis is considered a mistake.
A few questions for more experienced investors:
1. What are the primary drivers behind your sell decisions?
2. How do you distinguish between a temporarily unpopular stock and a genuinely deteriorating business?
3. How long are you willing to wait for a thesis to play out before deciding capital can be put to better use elsewhere?
4. Do you have specific criteria that trigger a sale even when the company is still fundamentally healthy?
5. How much weight do you place on portfolio simplification and reducing the number of positions you follow?
I'm less interested in opinions on Adobe specifically and more interested in the framework you use when deciding whether to hold, sell, or redeploy capital into higher-conviction ideas.