Motley Fool CEO Echoes Buffett: "The Best Time to Sell a Stock Is Never"

Billionaires and CEOs say the darnedest things

Billionaire and CEO Warren Buffett, for example, who has grown his company, Berkshire Hathaway, by an annual average of nearly 20% over close to 60 years, is credited with saying that "the best time to sell a stock is never. " Motley Fool CEO Tom Gardner, in a recent talk, echoed Buffett's words, explaining that he, too, sees infrequent trading as a key to getting rich

Here's a look at what both have said on the matter

Image source: The Motley Fool

In his recent talk, Gardner offered five rules to for your first few years of -- if you want to get rich

One of his rules was to not day trade

Here's his relevant statement, paraphrased a bit:

Day trading Costco, there's just a tragedy of epic portions

This makes sense, if you think it

The companies we know today that have grown gangbusters have done so over decades

If you've been along for much of that ride -- even if you got in a lot later than you would have wanted -- you'll ly make a tidy fit

When Buffett says his favorite holding period is forever, that means he invests in stocks (or buys entire es) that are worthy of being held forever

He seeks high-quality companies with great growth spects -- and has said "Never invest in a you cannot understand. " Buffett has d other thoughts on selling, too: You do things when the opportunities come along

I've had periods in my life when I've had a bundle of ideas come along, and I've had long, dry spells

If I get an idea next week, I'll do something

If not, I won't do a damn thing

That quote alludes to how many of us often trade our stocks too often because we feel we need to be active investors, to do something

Instead, Buffett notes that it's OK to do nothing when there's nothing to be done

Buffett has also said "If you aren't willing to own a stock for 10 years, don't even think owning it for 10 minutes. " Having a long-term mindset is important if you want to build wealth over the long run

What are some good reasons to sell

Despite all this good advice to be a long-term holder of great stocks, there are some good reasons to sell stocks

For example: Sell if you need the money now -- or expect to within a few years

It's best not to keep money you'll need in the next five (if not 10) years in stocks, as the market can be volatile over the short term

Sell if you don't understand the company

If you don't have a good handle on how exactly it makes its money and the challenges it faces, you could end up with unpleasant surprises one day

Sell if the thesis has changed

For example, maybe you bought into a company known for its capital-light online marketplace that generated fat fit margins

If it decides it's going to start manufacturing its offerings itself, that will ly shrink fit margins

You may no longer want to own it

Sell if the holding has grown so much that it's now a big portion of your portfolio

You don't want too many eggs in one basket, so consider rebalancing

Sell if the stock seems wildly overvalued, with a decent chance of retreating to a more reasonable level. (You might ignore this rule and still make money, though, if you plan to remain invested for many years. ) Sell if you've found a much more compelling other investment

Go ahead and think through the merits of holding or selling first, though

You bought into the stock and it's been a month or a year and it hasn't grown much

Patience is very important for long-term stock investors

Great companies will sometimes experience lulls

Do some digging to make sure the company's health and growth potential remain intact

You bought a stock and it dropped in value

Even good companies will see their stocks fall now and then, potentially sharply

Read up on the situation to determine whether the company is facing a temporary, fixable challenge or a big, long-lasting blem

As you go through your life, aim to be a long-term investor, hanging on to great stocks for long periods

Selena Maranjian has positions in Berkshire Hathaway and Costco Wholesale

The Motley Fool has positions in and recommends Berkshire Hathaway and Costco Wholesale

The Motley Fool has a disclosure policy.