The Growth Investor's Decision System

Growth investing has a paradox at its heart: the businesses most worth owning are rarely cheap. If the analysis is correct and the business is truly exceptional, waiting for it to become cheap may mean waiting forever — or watching it compound at high rates while you wait. The growth investor's decision system must resolve this paradox: when to buy a great business at a high price, how much to own, when the thesis has genuinely broken (rather than temporarily disappointed), and — most importantly — when not to sell.

Why This Matters

Philip Fisher held Motorola for nearly 30 years. Terry Smith has described selling a great business as "almost always a mistake." Nick Sleep and Qais Zakaria ran a remarkably concentrated portfolio of perhaps 5–10 positions, buying great businesses and holding them through extraordinary price volatility. The growth investor's decision system is oriented toward long holding periods, concentrated positions in the highest-conviction ideas, and extreme selectivity in selling. The most important decisions in growth investing are not when to buy — almost any entry point in a great business proves acceptable over a long enough time horizon. The most important decisions are (1) which businesses are truly great, and (2) when the thesis has broken and you must sell despite the pain.