"No One Ever Got Rich by Buying Stocks" - Chapter Two (Limited Time Access)
- FOFA
- Sep 13, 2025
- 4 min read
The phrase "No one ever got rich by buying stocks, only by selling them" is incredibly insightful, highlighting the key to "realizing profits" in the investment market. Buying is merely the process; selling is the action that transforms on-paper gains into actual wealth.
Here is a detailed explanation of the core ways one can "get rich by selling stocks":
1. Selling High to Realize Capital Gains
This is the most direct and classic way to "get rich by selling stocks."
Method: Buy a stock when its price is below its intrinsic value (value investing) or when its growth trend is established (growth investing). Hold it for the long term, waiting for the company's value to grow or for market sentiment to push the stock price to a target well above your cost basis. Then, sell to realize a substantial profit from the price difference.
Keys:
Choosing the right company: Buying quality assets is the prerequisite.
Holding with patience: Ignore short-term fluctuations and let compounding and time work their magic.
Overcoming greed: Dare to sell when the price reaches a reasonable or even overvalued level, rather than fantasizing that it will rise forever.
Example: Buying TSMC at NT$300 per share and selling in batches above NT$600, thereby realizing a profit of over 100%.
2. Disciplined Exits with Stop-Loss & Take-Profit
This is a risk management and disciplined execution strategy that protects principal and locks in profits, which is a key to building wealth over the long term.
Method:
Take-Profit: Pre-set a target profit price (e.g., a 20% gain). Once reached, immediately sell a portion or all of your holdings to "secure the profits," preventing a subsequent market reversal from erasing your gains.
Stop-Loss: Pre-set a maximum acceptable loss price (e.g., a 10% drop). If the price is hit, sell decisively to prevent a small loss from turning into a massive one due to unwillingness to admit a mistake or wishful thinking. This preserves the capital needed to "make a comeback" in the future.
Key: Discipline. Strictly execute the plan without being swayed by emotions. You can only get rich if you can preserve your capital.
3. Selling Options (Collecting Premiums)
This is a more advanced "selling" strategy that directly generates cash flow by "selling" contracts.
Method:
Selling a Covered Call: While holding a stock (e.g., 100 shares of AAPL), you sell (write) a call option on that stock. The buyer pays you a "premium." If the stock price does not exceed the strike price by expiration, you keep the premium for free. If it does, you must sell your shares at the strike price, but you still profit from the stock's appreciation up to that price, plus the premium. This is an "income enhancement" strategy.
Selling a Cash-Secured Put: You expect a stock to fall to a price at which you'd like to buy it (e.g., stock XYZ is at $100, and you want to buy it at $95). You sell a put option and set aside enough cash to cover the potential purchase. The buyer pays you a premium. If the stock price does not fall below $95 by expiration, you keep the premium. If it does, you are obligated to buy the stock at $95—which was your original plan—but your effective purchase cost is now lower ($95 minus the premium received).
Key: A deep understanding of options mechanics is required, and it usually necessitates holding the underlying stock or a large amount of cash as collateral. By continuously "selling" these contracts, one can generate a steady stream of cash flow in a sideways market.
4. Strategic Reduction & Rebalancing
This is not a one-time sell-off but a planned adjustment to optimize the entire investment portfolio.
Method:
Trimming over-appreciated assets: When a stock's significant rise causes it to become an oversized portion of your portfolio, leading to excessive risk concentration, you sell a part of it. The proceeds are then invested in other undervalued assets to achieve diversification and lock in some profits.
Asset Rebalancing: Your investment strategy is "70% stocks, 30% bonds." If a bull market causes your stock allocation to grow to 80%, you would sell 10% of your stocks and buy bonds to restore the 7:3 ratio. This is a mechanical "sell high, buy low" discipline that forces you to sell assets that have appreciated and buy assets that have appreciated less (or have declined).
Key: A systematic investment plan based on discipline, not on market prediction.
5. Selling at the Peak of a Bubble
This is the most difficult but potentially most rewarding method. It requires a profound insight into market cycles and crowd psychology.
Method: When the market is in a state of extreme frenzy, everyone is talking about stocks, P/E ratios are unbelievably high, and talk of "this time it's different" is rampant, you must overcome greed and the Fear of Missing Out (FOMO). By thinking contrarianly, you gradually sell your holdings and convert your chips back into cash.
Key: Contrarian thinking and overcoming human nature. This requires immense courage, as you might sell too early and watch the market continue its frantic rise for a while longer. However, history has proven that those who successfully exit before a bubble bursts are the biggest winners.
Core Idea
The core of the statement emphasizes the importance of "realizing profits" and the principle that "cash is king."
Buying is the beginning of "paper wealth"; the market value in a stock account is just a number.
Selling is the "final kick" that turns those numbers into real, usable wealth in your bank account.
All successful investors, whether they are value investors, growth investors, or traders, must ultimately complete the entire profit cycle through the act of "selling." If you don't know how to sell, you don't know how to invest. Therefore, your perspective profoundly points out one of the ultimate secrets to investment success.
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