Emily Flippen

Some of the biggest mistakes investors make aren't the stocks they buy, they're the ones they sell.

We're reflecting on past selling missteps today on Motley Fool Money.

It's Tuesday, November 25th.

Welcome to Motley Fool Money.

I'm your host, Emily Flippen, and today I'm joined by Fool analysts Jason Hall and Jess Santoro to discuss one of the most dangerous things investors can do, selling good companies too soon.

Today, we're going to be looking back at some of the Rule Breaker and Stock Advisor recommendations that we sold that went on to become 5, 10, and even 100 baggers.

to hopefully help you, our listeners, build a healthier mindset around when to sell, when not to, and why buy and hold investing still usually wins out.

Jason, I want to start big picture here.

If you look back at many of our full scorecards, we've had some amazing winners and, of course, some absolutely brutal mistakes.

And many of these mistakes, in my opinion, the worst ones are the ones that we sell, right?

What is it about selling that is so emotionally tempting to investors, even those like us that claim to be very long-term?

Yeah, in my experience, investors always have this process and usually determine that their risk tolerance is higher than what it actually is, and it's not until you're sitting on a lot of unexpected losses that investors realize, oh, no, maybe I wasn't as risk tolerant, or I am more risk adverse than I gave myself credit for.

This is true for all of us.

When you look at the emotional decisions that an investor makes, we're pretty good about focusing on the long-term here at The Fool.

We talk about it a lot, but we're still not perfect.

One of the classic examples that comes to mind for me is David Gardner, who sold Netflix and Stock Advisor back in 2003 for valuation reasons.

At the time, to your point, Jason, that was locking in some really, really nice gains, and it looked like a smart move in the short-term, because Netflix did go on to fall nearly 60% over the course of the following year.

And of course, David eventually corrected this mistake and ended up re-recommending Netflix many times after that.

But if he had just held on, that initial sale would have resulted in 26,000% gains, which is obviously making up for any amounts of those near-term losses.

So, Jeff, I mean, that's how it stands out to me.