Even as a long term investor I should trade?

[JackJackJack]

My little portfolio of 4 blue chips - actually was $500 bucks in the green yesterday.
First time ever since I started buying shares in December - at one point it was down $3000.
So I am thinking - why didnt I sell the lot yesterday - take the small profit and re-enter at the next big dip?

 

[Sean K]

So I am thinking - why didnt I sell the lot yesterday - take the small profit and re-enter at the next big dip?

And the next BIG dip is when? And between now and then how much will the market go up? Or, perhaps you time it perfectly and buy on the next big dip, only to have a BIGGER dip follow it. Or, you get it right.....

Taking profits, topping up and rebalancing portfolios can be considered smart strategy for active investors IMO, but to get it right takes some time, luck, and losses.

 

[Trembling Hand]

So I am thinking - why didnt I sell the lot yesterday - take the small profit and re-enter at the next big dip?

Well why didn't you? ...... Think you know the answer.

Willing to be down $3000 but only take $500 profit.

Not much of a Risk to Reward ratio.....

If you are going to trade you need more than that or you will find yourself wasting a lot of time and $$.

 

[happytrader]

My little portfolio of 4 blue chips - actually was $500 bucks in the green yesterday.
First time ever since I started buying shares in December - at one point it was down $3000.
So I am thinking - why didnt I sell the lot yesterday - take the small profit and re-enter at the next big dip?

Do you think it might have to do with your expectations of making a larger profit or possibly expecting this profit to make up for December's lack of gains or losses?

Being grateful and appreciating each trade for what it is will get you a long way in this business.

Cheers
Happytrader

 

[nioka]

My little portfolio of 4 blue chips - actually was $500 bucks in the green yesterday.
First time ever since I started buying shares in December - at one point it was down $3000.
So I am thinking - why didnt I sell the lot yesterday - take the small profit and re-enter at the next big dip?

Had you traded your profit would have been reduced by $120 (4 stocks) to sell and it would cost another $120 to reenter the market. Not much of a return unless the market was sure to fall and you could buy in much cheaper.
Do some "paper" trading and see how you go.

 

[Sean K]

Had you traded your profit would have been reduced by $120 (4 stocks) to sell and it would cost another $120 to reenter the market. Not much of a return unless the market was sure to fall and you could buy in much cheaper.
Do some "paper" trading and see how you go.

Minus capital gains tax and the value of your time. I value myself at about 50 cents and hour so with all that decision making and procrastination time, I'd be out a few K...

 

[JackJackJack]

Yeah not really worth the effort given my current circumstances - but as a newbie - I have noticed that there are profits to be made by buying fundamentally sound shares that are suffering purely from investor sentiment (aka known as panic - the DOW blues - US recession - sub prime carnage etc) - my future strategy may just involve allocating a portion of my capital purely for dip buying.

Jack

 

[ozwrangler]

There's nothing wrong with taking a profit, but make sure you factor in all buying and selling costs (e.g. brokerage, capital gains tax etc.) when making the decision.

Shares kept for more than a year attract a CGT discount, though this is not a good reason alone to hold on to a share.

 

[So_Cynical]

I know a guy at work who has a buy and hold mentality/strategy.....hes given back 60K in profits
this year...he don't even consider hes lost anything.

 

[JackJackJack]

My little portfolio of 4 blue chips - actually was $500 bucks in the green yesterday.
First time ever since I started buying shares in December - at one point it was down $3000.
So I am thinking - why didnt I sell the lot yesterday - take the small profit and re-enter at the next big dip?

 

[nioka]

My little portfolio of 4 blue chips - actually was $500 bucks in the green yesterday.
First time ever since I started buying shares in December - at one point it was down $3000.
So I am thinking - why didnt I sell the lot yesterday - take the small profit and re-enter at the next big dip?

Ah!!! If only you could see into the future. If only you had known what was going to happen today. You can't trade hindsight.

 

[Santob]

Minus capital gains tax and the value of your time. I value myself at about 50 cents and hour so with all that decision making and procrastination time, I'd be out a few K...

50 cents?? I thought I was cheap at 75c an hour - and I only offer crap advice.

 

[meganut]

take the small profit and re-enter at the next big dip?

I was thinking this as well, 5 days after my first 2 buys I was up $3700 on an outlay of $7300, haven't been back there since but with what happened on the 22nd Jan I could've cleaned up and re-entered for even more profits, I was thinking long term but am now re-evaluating with this volatile market.