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Free Cash Flow Drives Stock Returns
- Free cash flow per share growth closely matches stock price returns over long periods.
- This metric is a strong indicator of a company's financial performance and stock appreciation.
Sell If Thesis Changes
- Sell when your original investment thesis no longer applies.
- Always write down your thesis to assess it objectively over time.
Trim Overvalued Holdings
- Trim positions when valuation multiples become stretched but the business remains solid.
- Take profits by doing "gardenings," like trimming winners, to keep your portfolio balanced.