An Investment Framework by Peter Lindmark

Investors should develop an investment framework which they make their decisions around. They should have tenets by which they abide in order to avoid permanent impairment of capital, while generating above average returns. Below are ideas from various others frameworks that are useful.

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When does an investor sell securities? Eddie Lampert was asked that question in a Washington Post article in 1995: "The reality is that when I find something I really like, I don't normally sell it. That said, there are three possible reasons to sell. One is if the facts have changed adversely -- if the economics of the business have deteriorated, if the people running the business have left or are no longer doing a good job. Second is if the price just gets to a point that the valuation is so high we think it is unsupportable and exposes us to the risk of a permanent loss of capital. Third is if there is a better alternative investment, but the burden of proof is always on the new idea."