Confessions of a Terrible Seller

What would you do if you could never sell another stock?

Most would not like such a world. They value the ability to get in and get out of positions in a hurry depending on the overall prospects of the business, their views on the macro environment, or especially after a particularly bearish earnings report. For active participants in the market, liquidity is a feature. Not a bug.

A select few would have no problem with such a place. Hell, they’d probably prefer it. They are content to dollar cost average into what they view are excellent companies with reasonable prospects. Many don’t even put that much thought into their portfolios; they simply take a portion of their paycheque and put it to work in a broad index of worldwide stocks. Then they hit the golf course in an attempt to be as angry as the rest of us.

WHY WON’T THE BALL GO WHERE I WANT IT TO, DAMMIT????

I’ve long said the selling is the hardest part of investing, yet I’m also on record saying that I’d like fewer positions in my portfolio. So I’ve been slowly selling down a few positions that I feel are no longer core, or perhaps smaller positions that are in my RRSP/TFSA and so I don’t have to worry about the tax consequences.

Like my Suncor (TSX:SU) position. A few months ago I started selling in the low-$60 range, completing the sale process at around $65 per share. My average cost was around $35 per share, helped out nicely by a well-timed buy in October, 2020. Once dividends were included in total return, I sold for a comfortable profit.

My thought process was pretty simple. I own oil stocks not because I have strong thoughts on the commodity — like so many energy investors do — but because I view it as a consumption hedge. I buy gas for my car and consume other petroleum-based products, and when oil goes up the gains in my portfolio reduce the pain I feel at the pump.

But I’m consuming less oil than ever, and I truly believe the world is awash in the stuff. Technology has made previously uneconomic oil fields viable, and we’re using other tech to discover oil in surprising places. Like did y’all know that there are huge oil deposits off the coast of Guyana? And they’re coming online in a hurry? Up until a few months ago I had barely heard of Guyana, and I sure couldn’t find it on a map.

Anyway, I sold my Suncor shares, and it has proven to be a mistake. Just a few weeks after my last sale the stock has rocketed some 20% higher, buoyed by higher oil prices and bullishness on Alberta’s energy future.

My poorly timed Suncor sale has me thinking, yet again, about what would happen if I embraced a coffee can approach, changing my attitude to a never sell approach.

Let’s quickly examine the pros and cons of such an approach from a dividend investor’s point of view.

The pros

Let’s start with the basics. Just what exactly is a coffee can portfolio, anyway?

The metaphor comes from an old beaten up coffee can, just like the one in the picture above. A coffee can portfolio is one that stocks enter and never leave. You take your stock certificates — when such things existed — and you stuck them in a coffee can. It was then placed on a high shelf, or buried in the backyard, or stashed away somewhere equally as safe.

The first pro of such a plan is that it frees up so much brain power. Successfully buying and selling a stock means you get two decisions right — the buy and the sell. If we look at each like a coin flip, it means that a successful buy and sell is the equivalent of flipping heads twice. It works out to a one-in-four chance.

But I’d argue that those odds are completely wrong, especially if you do the buy part correctly. Because there will be very few times that it makes sense to sell a successful business. A good business should not be punted from the portfolio because it’s overvalued or because you wish to diversify. It should continue to be held so the miracle of compounding can do its thing.

Basically, your odds on the buy are better than 50/50, as long as you purchase that good business at a reasonable price. But your odds on the sale are much worse than 50/50, since it usually makes little sense to punt that asset from your portfolio.

Therefore, the easy way to increase your odds of success is to ignore the decision where your odds are bad. Just don’t make it.

To further the gambling analogy here, think of making any decision like a parlay. The casino loves to offer parlays because getting multiple decisions correct is much harder than getting one or two right. By introducing a selling decision into your investing, you’re essentially creating a parlay, which just decreases your odds of success.

Everybody thinks they have a good selling plan, but most don’t. I’ve thought about the practice of selling for probably hundreds of hours, written about it, debated the topic with good investors who are smarter than me… and after all of that I’m the first to admit I’m bad at selling.

And so, the logic is simple. I just shouldn’t bother. A coffee can portfolio accomplishes just that.

There are other reasons to embrace such a philosophy. By only giving yourself one decision — when to buy — you’ll put all your energy into that one thing. This should result in better buy decisions, since you no longer have the ability to punt a position that seems to be no longer working. There’s no escape valve.

Humans are also bad at selling their losers right around the time they’re poised to recover. We overreact to the short-term without realizing that a lot of price moves are just Mr. Market acting crazy for no good reason. When you’ve pledged to never sell, then such moves are noise. You either watch the stock go down to zero and have to admit you made a mistake, or buy some more when it’s cheaper.

Never sell also ensures that you punt the tax liability down the road for decades, which is one of the biggest benefits to buy-and-hold investing.

It’ll also ensure that your biggest winners end up atop your portfolio. Our old friend Jim the Plumber added aggressively to Royal Bank in the 2000s and into the early 2010s, and it worked out massively well for him. He’s amassed a $4.5M portfolio with nearly $1M invested in Royal Bank shares — all from relatively modest investments made 15-25 years ago. He took a position in a company he believed in, it was massively successful, and he’s laughing all the way to the proverbial bank.

Such an approach works hand-in-hand with dividends. Each quarter the company distributes a portion of its profits to the owners, giving us cash that we can spend, reinvest in the same name, or put to work in another stock. We’re not forced to sell shares to access cash. That is what makes dividends so wonderful.

And finally, a coffee can portfolio is almost completely hands off. You don’t need to monitor earnings reports, or scroll social media for tidbits on the company, or anything like that. Why bother following a company closely if you know you’ll never sell? You can easily get back up to speed if short-term weakness creates a buying opportunity.

The cons

While I’m a big fan of a coffee can/never sell approach, I do have to admit there are a few things wrong with such a plan.

When it comes to selling, I find the process of selling a loser is much easier than selling a winner. There comes a point when it becomes obvious the business is impaired and just isn’t going to come back. If we embrace a never sell approach, these losers will always be in the portfolio, taking up mental bandwidth. That’s also precious capital just sitting there in a lackluster business.

If you never sell, then you never clean the dead weight from the portfolio.

There’s also a disadvantage to letting your winners concentrate. Constellation Software (TSX:CSU) shares soared to above $5,000 each before falling by more than 50%. If 20% of someone’s portfolio was in CSU, that’s a significant haircut. Even if such an event never occurs, someone could still feel anxiety having so much of their net worth tied up in one company. It might make sense to sell just for the mental health benefits.

On the other hand, one can easily rebalance the portfolio by adding new dollars to new or smaller existing positions. The names on the top concentrate on their own, but new money is used to diversify.

You’ll also be forced to sell certain positions at some point. My First National shares were acquired in the latter part of 2025, which was a bittersweet moment for me. I enjoyed the sweet one-time boost to the share price, but I struggled to replace the company’s blend of dividend growth and special dividends. You’ll find that good companies get acquired surprisingly often — especially if you invest in the small cap world.

Should you embrace a coffee can approach?

For years I’ve been told that I need to own fewer stocks, that I’m basically operating an index fund over here.

To put things into perspective, I’m currently sitting on close to 90 different stocks. No, that is not a typo.

And so I was taking steps to reduce the number of names in my portfolio. I sold long-term winners like Suncor. I used my First National proceeds to add to current positions. And I instituted a “one in, one out” rule when it came down to buying new names for the portfolio.

My plan is still to slowly reduce the number of stocks I own, but I also want to do it in a way where I mostly avoid making poor sell decisions. This means I’ll be patient and wait around for positions to be acquired. Or I’ll wait until it’s obvious the business is impaired. This isn’t a months-long process. It’ll take years. I’m fine with that.

I’m not going to fully embrace a coffee can approach, but my goal is to get 95% of the way there. Going forward I hope to only make 2-3 sell decisions per year, with most of those decisions that were forced onto me.