Time to harvest
Weekly 8 2025
In the past, I’ve compared value investing to tending a vegetable garden. For those who know me, that might seem odd—because while I’m passionate about (value) investing, I absolutely loathe gardening. But that aside, the parallels are striking.
Just like gardening, as investors, we plant our seeds—our money—with the hope that they will grow into beautiful flowers, vegetables, or fruit. We nurture these plants with dedication. Instead of water and fertilizer, we use knowledge: we study our companies inside and out and reinvest our dividends.
We exercise patience and keep a close watch on our plants. We deal with pests—just as we address poor management through annual meetings. And if a plant doesn’t turn out as expected and starts resembling a weed, we pull it out. We plant a new seed or give the remaining plants more space and oxygen.
The hardest part of gardening is preparing the soil, selecting the right seeds, and planting them. The same goes for investing: finding the right stocks—ones that are fundamentally strong, have enough growth potential, and are still reasonably priced—is no easy task.
While our companies remain in our portfolio, they demand our attention. We must stay alert to signs of decline. Some plants bear fruit after just one season, while others take years. Some need to be replanted annually (= capital gains), while an apple tree continues to bear fruit for years (= dividends).
Cash Is an Option Too
And then comes the moment when gardeners and investors often react very differently.
For a gardener, the harvest is a moment of joy. Finally, they can enjoy the fruits of their hard work. They preserve or process their yield to make it last as long as possible until it’s time to sow and plant again.
Investors, however, often hesitate. “Should I sell this stock? I don’t have a good alternative. Cash yields nothing, so why hold onto it?” They prefer to collect dividends, even if a company is overvalued. “At this growth rate, the value will eventually catch up with the price...” These are the same doubts I had yesterday before sending out the sell notification—after all, Vicat still isn’t expensive.
There are dozens, if not hundreds, of reasons to hold on to a stock. But often, the risk-reward ratio no longer makes sense. The danger is that you hold on to companies for too long.
With your one-season plants—the cheap but lower-quality stocks—you risk them simply rotting away. With your fruit trees—quality companies—that’s less of a problem. Even if the apples on the branches rot (= the stock price drops by 20%), the tree itself remains healthy. In other words, if you hold on to an overvalued quality stock, you may miss out on short-term gains, but in the long run, you’re usually fine.
The biggest issue, however, is that if you don’t harvest in time, you won’t have any seeds/money to plant new ones in the next season (during a market correction or crash). Your capital gets stuck.
I can’t predict whether the market will crash, correct, or stabilize. What I can see is that harvesting today wouldn’t hurt.
Not only is the U.S. market overvalued, but Trump remains an unpredictable factor that can send markets in any direction. If the U.S. market crashes, Europe will follow—probably less severely since European stocks are already cheaper, but it won’t be pleasant.
With my apple trees, I’d be frustrated to lose a harvest. But I’d also take advantage of the opportunity to plant new trees at a low cost. Only in times of crisis can we buy truly top-tier companies at attractive prices. Any temporary loss would be more than offset by the exceptional buying opportunities that arise.
Market crashes always happen suddenly and unexpectedly. No one can consistently time the market—unless they’re hiding it very well.
Long-Term Thinking Remains Key
If you buy a stock today, don’t think about its potential in 6 or 12 months. Ask yourself: How much could I lose if the market crashes tomorrow?
Winners like Vicat, Cloetta, and Weyco—where we’ve made 24% to 50% gains in just a few months—are great, but they’re not the goal. These stocks also passed my stress test and could have stayed in the portfolio longer.
The key questions we should always ask: How safe are these companies? Are they one-season plants or fruit trees? Today, it’s essential to evaluate everything with at least a three-year horizon. Will this company still be around in three years? Can it survive a crisis? Better yet—can it emerge stronger?
Our long-term perspective is our greatest advantage as individual investors. We can focus on the next five years, while fund managers are judged on their performance quarterly or, at best, annually.
As we harvest, I’m already looking for new seeds for the next planting season. Since there are still interesting companies available at reasonable prices today, I don’t mind harvesting from time to time—even if the price could go higher, as with Vicat.
Articles and updates this week
This week, we discussed the financials of the following companies:
Sipef: Another solid year
Nextensa: Bold choices
On Tuesday, we published the fourth lesson in our "Introduction to Value Investing" series, titled "Behind Every Stock is a Business."
Transactions - Doubler Portfolio
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Vicat: 40 shares at €47.35 each (closing price on 19/02/2025), totaling €1,879 after costs. A return of 51.65% in six months.