Hi,
If you are able get back 95% of your cost of buying the particular stock by selling half of your shares in that stock?
Would you do that?
I realize there are different viewpoints into why some will sell and others won't, and would like discuss the diverse viewpoints?
Thank you.
I sell based on valuations. If the story is still good, there's no reason to sell a good company.
I think you hit the nail on the head when you mentioned there are diverse views and reasons, even in selling.
For me, I either sell all or none. At best, I may split up into batches for best execution if there is a substantial holding, and if I am comfortable after assessing my opportunity. Ultimately, the aim is still to divest entirely if I set out to do so.
I do not buy into the practice of selling to recover cost, and keeping the rest as pillow stock. Why? To me that is just an infactual way of reassuring myself that I have 'nothing to lose', or probably as a trump card to drum up my savviness to others in future. You either take maximum profit or you don't. I don't like to waste money 'buying' some respect from others.
Some prefers to keep 1 lot or even a few shares just to qualify for post-retirement AGM buffets. That is different altogether. I say why not. It is then a lifestyle choice and not strictly investment related.
I noticed you mentioned selling half to get back 95% of cost and not 100%. Why not? Is it to maintain some feeling 'that you have a stake in it?'
i think by convention the best reason to sell (regardless of P or L) is you think you have spotted a better stock or investment. Other than that it's time you need the money for something else.
i have been selling earlier than usual because i need capital for some other investment. (Asset allocation purpose. Er.. it may or may not be a better investment in the long run). i have been selling since 2010 till now.
I will sell half my stocks to recover the cost.
My reasoning is that from my personal risk management perspective, its the best thing to do.
a. When I sell half, I will get back my invested capital and thus reduce risk of my investment portfolio.
b. All dividends past and future will be profits.
c. All future dividends will be profits without risk.
d. I will participate in the stocks growth without risk.
e. I will free up my capital to invest in other opportunities when they arise. Maybe i will re-invest in the particular stock if the price & fundamentals are right.
These are my reasons for selling half of the shares of the stock.
(12-07-2012, 11:19 AM)Blackjack Wrote: [ -> ]I noticed you mentioned selling half to get back 95% of cost and not 100%. Why not? Is it to maintain some feeling 'that you have a stake in it?'
Oh...95% is not 100% so some people would want to wait for 100% before they sell, but for me as long as it is 90 - 100 %, I will sell .
(12-07-2012, 11:40 AM)flinger Wrote: [ -> ]I will sell half my stocks to recover the cost.
My reasoning is that from my personal risk management perspective, its the best thing to do.
a. When I sell half, I will get back my invested capital and thus reduce risk of my investment portfolio.
b. All dividends past and future will be profits.
c. All future dividends will be profits without risk.
d. I will participate in the stocks growth without risk.
e. I will free up my capital to invest in other opportunities when they arise. Maybe i will re-invest in the particular stock if the price & fundamentals are right.
These are my reasons for selling half of the shares of the stock.
(12-07-2012, 11:19 AM)Blackjack Wrote: [ -> ]I noticed you mentioned selling half to get back 95% of cost and not 100%. Why not? Is it to maintain some feeling 'that you have a stake in it?'
Oh...95% is not 100% so some people would want to wait for 100% before they sell, but for me as long as it is 90 - 100 %, I will sell .
What if it is a >3 bagger ? Why capped an eagle when it is soaring?
For growth share if the PE is close to its highest PE for the past 10 years, i will sell slowly. Eventually all will be sold off.
For dividend type of share, since its meant to hold long term for its high dividend, if its current share price (SP) exceeds my buy average price (BP) by 10 times the consistent average dividend, i will sell.
i.e (SP - BP)/dividend >= 10.
10 is because every 10 years there is sure to have 1 severe recession.
(12-07-2012, 11:56 AM)WolfT Wrote: [ -> ]What if it is a >3 bagger ? Why capped an eagle when it is soaring?
For me it doesn't matter its 3 or 4 or 10 bagger.
Once I am able to reduce my risk by getting back my invested capital, the rest is profits and it can fly as high as it wants as long as the fundamental are ok.
Many of us have made the mistake of our stock paper loss or gain is not real money. This is called the "Casino Effect"- Chip is not real money psychology. Another words try your best never let your winning stock drift into losing stock, ever. i admit i have this weakness too. Definitely it happens to me before and most probably it's going to happen again. So that's one more reason to sell.
I hardly sell. In fact i've held some stocks for close to 10 years? But if i realise that the company's profitability has dropped not due to a one -off event or normal business cycle but due to some fundamental change in the industry, i'll sell all. But then different people, different styles.