Never Sell Your Stocks Just Because They Go Nowhere

One of the biggest psychological mistakes in stock investing is buying a great company, holding it for several years, watching the share price barely move, and then deciding it is time to sell.

The problem is that a stock going sideways does not necessarily mean the investment has failed.

In fact, some of the greatest companies in history spent long periods delivering little to no meaningful price appreciation before entering extraordinary periods of wealth creation. And it is precisely during these periods of boredom, frustration, and doubt that many investors abandon positions that could eventually become the biggest winners in their portfolios.

Microsoft is one of the best examples.

The Market Can Test Your Patience for Years

By the early 2000s, Microsoft was already one of the most important companies in the world. Yet after the dot-com bubble burst, its stock entered an extremely frustrating period.

From the end of 2000 through the end of 2013, Microsoft shares produced virtually no meaningful nominal price appreciation. Based on closing prices, the stock finished 2013 at roughly $30.90, below the level seen at the beginning of that period.

Thirteen years.

For an investor accustomed to watching the stock market every day, thirteen years can feel like an eternity.

Imagine buying Microsoft and, after five years, realizing that the stock price had barely advanced. Eight years later, there was still no spectacular return. Ten years later, much of the same story.

How many investors would have sold?

Probably a lot.

And that is exactly the point.

An investor does not simply need to identify good companies. The investor also needs to remain a shareholder during the periods when the market has not yet fully recognized the company's potential.

Microsoft eventually entered one of the greatest periods of value creation in its history. From 2013 onward, the stock delivered extraordinary annual returns in several years, including gains of roughly 40% in 2013, 61% in 2019, 57% in 2023, and 51% in 2021.

An investor who sold simply because they became tired of waiting would not have participated in that transformation.

Apple Shows the Same Principle

Apple provides an even more interesting example.

Before becoming one of the most valuable companies in history, Apple went through decades of extreme volatility. There were years of devastating declines, periods of recovery, and long stretches during which shareholders had to tolerate enormous uncertainty.

Between 1995 and 2000, for example, Apple experienced both severe losses and extraordinary gains. In 1996 and 1997, the stock fell more than 30% in each year before gaining more than 200% in 1998. In 2000, it lost more than 70%.

An investor looking at only certain periods could easily have concluded that the investment thesis had failed.

But the real problem was not necessarily the company.

It was the investor's time horizon.

The Danger of Selling a Great Company

There is a fundamental difference between selling because the investment thesis has been destroyed and selling because the stock has gone nowhere.

The first can be rational.

The second is often nothing more than impatience.

If a company has lost its competitive advantage, is destroying capital, has taken on excessive debt, is losing market share, or is experiencing structural deterioration in its business, selling may be exactly what an investor should do.

But if the company continues to grow, generate cash, increase earnings, strengthen its competitive position, and reinvest capital effectively, simply watching the stock move sideways is not, by itself, a reason to abandon the position.

This is where one of the most important asymmetries in stock investing appears.

You can lose money on several companies and still have an extraordinarily successful portfolio if you remain exposed to the few companies that eventually become giants.

The Problem With Trying to Know When to Sell

Imagine you bought an exceptional company at $10.

It rises to $20.

You decide to take your profit.

Then it reaches $30.

You remain on the sidelines.

Years later, the company is worth $100.

You identified a great business, conducted the right analysis, bought at an attractive price, and still captured only a small fraction of the eventual result.

This happens because many investors treat a stock as if it has a predetermined destination.

But exceptional businesses do not necessarily work that way.

A company can go from small to large, from large to enormous, and eventually transform the wealth of the people who remained shareholders throughout the journey.

That is precisely why Peter Lynch popularized the concept of the tenbagger in One Up on Wall Street: a stock capable of turning an initial investment into ten times its original value.

Lynch demonstrated how a single enormous winner can have a disproportionate impact on the overall performance of a portfolio.

And there is an important consequence to this idea.

You do not know in advance which company will become your tenbagger.

That is why systematically selling companies that are performing well—or companies that have not yet realized their full potential—can be extremely damaging to long-term returns.

Investors Have to Be Comfortable With Boredom

Investing in stocks should not be a competition to see who can trade the most.

It can actually be the opposite.

The great advantage of a long-term investor is being able to say:

I do not need this company to go up tomorrow.

If the business continues creating value for ten, fifteen, or twenty years, the stock price will eventually have to reflect at least some portion of that value creation—although there is never a guarantee, and the market can remain disconnected from business fundamentals for remarkably long periods.

The market can ignore a company for years.

It can consider the business outdated.

It can favor another company.

It can move capital into completely different sectors.

And the stock price can remain virtually unchanged.

Meanwhile, the business keeps working.

Revenue grows.

Earnings grow.

Cash flow grows.

Market share increases.

New products are launched.

Debt declines.

Management continues reinvesting.

And at some point, the market's perception can change.

When that happens, years of apparent stagnation can be followed by a much faster period of appreciation.

Is Never Selling Really a Rule?

There is an important nuance here.

“Never sell your stocks” should not be interpreted as an absolute prohibition against selling.

A company can stop being a great business.

The investment thesis can be broken.

Management can change dramatically.

The valuation can become irrational.

A clearly superior opportunity can emerge.

The point is something else:

Selling should not automatically become part of the strategy simply because the stock has gone sideways.

The price is information.

But the price is not the business.

If you bought an exceptional company with the intention of being a shareholder for decades, a sideways stock price over several years should not, by itself, change your plan.

Because the greatest risk may not be enduring a decade of boredom.

The greatest risk may be selling the very company that could have become your tenbagger.

And in the stock market, a single extraordinary winner can make a disproportionate difference to the final outcome of an investment portfolio.

That is why one of the most important skills an investor can develop may not be knowing when to buy or when to sell.

It may be knowing when to simply do nothing.

Disclaimer

This article is provided for educational and informational purposes only. It does not constitute investment advice or a recommendation to buy, sell, or hold any financial asset. Investing in stocks involves risk, including the possibility of losing part or all of the invested capital. Past performance does not guarantee future results. Investors should conduct their own research and consider their individual objectives, investment horizon, and risk tolerance before making financial decisions.

Sources

Peter Lynch, One Up on Wall Street — reference for the concept of the tenbagger.

Microsoft Corporation — historical stock price and corporate information.

Apple Inc. — historical stock price and corporate information.

Historical market data used to provide context for the performance periods discussed in this article.