How to buy and sell stocks in a rigorous way(Anas)

There are two primary attributes of a stock that you should consider:

1. The quality of the business
2. Relationship between the stock price and the range of intrinsic values

The higher the quality of the business, the narrower the range of values that you should come up with. Conversely, for businesses of low quality, the value range might be so wide as to be almost useless.

My process for buying a stock is as follows:

1. Establish a quality cut-off below which I will not buy a stock
2. Create rigorous guidelines for the price to value relationship that I require a stock to have before I buy it as function of both quality and price/value relationship
3. Consider opportunity cost and other portfolio management considerations

Knowing when to sell a stock is also very important. Value investors are frequently better at buying than at selling. There are four possible reasons to sell:

1. Price went up to a point where it is now close to your estimate of value
2. New information or analysis caused you to change your value range and the new price/value relationship is unattractive
3. Better investment opportunities become available
4. Portfolio management consideration to limit position size or other sources of investment risk

You want to be systematic and rigorous in your entire investment process. Just as you should be rigorous in valuing a business, so you should have a disciplined process for when to buy and sell the stock.