Selling Australian Shares

[frugalcharly]

I've been holding a number of Australian shares for a long time.

A while back I left my stockbroker and transferred my Australian shares to an on-line broker account.

Due to personal reasons I have to sell-off all my holdings; I plan to do this in a measured & gradual manner.
(Some of my holdings are in negative territory which I plan to keep until recovery).

Since my trading knowledge is limited I require some kind of strategy on implementing my undertaking.

Grateful for any advice/pointers on how to sell down Australian shares advantageously and efficiently.
TIA.

 

[Junior]

I've been holding a number of Australian shares for a long time.

A while back I left my stockbroker and transferred my Australian shares to an on-line broker account.

Due to personal reasons I have to sell-off all my holdings; I plan to do this in a measured & gradual manner.
(Some of my holdings are in negative territory which I plan to keep until recovery).

Since my trading knowledge is limited I require some kind of strategy on implementing my undertaking.

Grateful for any advice/pointers on how to sell down Australian shares advantageously and efficiently.
TIA.

A few options, and thoughts on the matter:

• 'Keeping until recovery' can prove to be a high-risk strategy, as many companies never recover or reach their former glory, in fact companies regularly fail...so your initial investment can eventually be valued at $0 - something to consider.
  
• Timing the market is difficult. Some investors use a Dollar Cost Averaging strategy (usually when buying rather than selling). This involves implementing trades once a month (for example) over a period of time - say 6 or 12 months, thereby reducing the risk of selling everything at a time when the market happens to be at a low point.
  
• Alternatively, attempt to sell at the right time....this can be achieved either by selling when you believe the market is 'overvalued', - or on an individual stock level, i.e. sell when a particular company/stock is deemed to be overbought or expensive.
  
• Diversify into other asset classes immediately to reduce risk and volatility. Sell some shares and invest in overseas shares & bonds.
  
• Concede that, as you know little about investing, you will just sell everything right now and invest in cash!

 

[Knobby22]

I personally think we are going to see a share rerating over the next few months so I agree with you to slowly sell down the holdings.

Try to ignore the price you bought them for and look at which shares travelled well the last two weeks, keep them for now and sell off the others.

It doesn't matter if they make a loss as you can use this to offset the gains.

Again, try to wipe from your mind what you bought them for and look at them as they are now. Seriously, otherwise you will keep the crap and sell the shares that are rising.

 

[pixel]

I personally think we are going to see a share rerating over the next few months so I agree with you to slowly sell down the holdings.

Try to ignore the price you bought them for and look at which shares travelled well the last two weeks, keep them for now and sell off the others.

It doesn't matter if they make a loss as you can use this to offset the gains.

Again, try to wipe from your mind what you bought them for and look at them as they are now. Seriously, otherwise you will keep the crap and sell the shares that are rising.

I agree 100%.
It is very tempting to "Buy, Hold, Pray" = hope that a bad investment will turn good in the end. But on average, that's not going to happen. Some optimists will even "average down", hoping that a decreasing cost base will somehow make it easier for the stock to return to profitability. All it does is increase the amount of money tied up in a losing position, robbing you of the opportunity to invest in an up-and-comer that will earn you serious money with far greater degree of certainty. ... And don't forget to sell when the rising trend is showing signs of turning.

NB: The Market doesn't care what you, a small retail investor, paid for a stock when you bought it. The Market doesn't even know that you exist or when and for how much you bought. None of that has any influence on market price determination.

A piece of advice from Phil Carret’s The Art of Speculation:
If you have 1000 shares of a stock worth currently, say, $9, disregard entirely the price you paid for it. Rather ask yourself this question: “If I had $9,000 cash today and wished to buy some security, would I choose this stock in preference to every one of the thousands of other securities available to me?”
If the answer is strongly negative, sell the stock! It should not make the slightest difference whether the stock cost you $5 or $13.
Your entry price is totally irrelevant, but the average punter gives it considerable weight.

 

[frugalcharly]

A few options, and thoughts on the matter:
[*]'Keeping until recovery' can prove to be a high-risk strategy, as many companies never recover or reach their former glory, in fact companies regularly fail...so your initial investment can eventually be valued at $0 - something to consider.
[/LIST]

Excerpts of my account as at 16 March 17:00:-
BHP - Qty: 1,832, Market Value: $30,795.92, Average Price: $33.64, Total Costs: $61,636.65, Loss: 50.04%
CWN - Qty: 1,250, Market Value: $15,150.00, Average Price: $16.00, Total Costs: $19,998.07, Loss: 24.24%
ORG - Qty: 4,577, Market Value: $22,930.77, Average Price: $15.07, Total Costs: $68,886.89, Loss: 66.71%
The chances to fail for these particular companies are probably remote but the recovery may take a while; I personally can't see any other option but to hold until recovery which am prepared to do so.

[*]Timing the market is difficult. Some investors use a Dollar Cost Averaging strategy (usually when buying rather than selling). This involves implementing trades once a month (for example) over a period of time - say 6 or 12 months, thereby reducing the risk of selling everything at a time when the market happens to be at a low point.

[*]Alternatively, attempt to sell at the right time....this can be achieved either by selling when you believe the market is 'overvalued', - or on an individual stock level, i.e. sell when a particular company/stock is deemed to be overbought or expensive.
[/LIST]

Would not selling a particular holding trading at or above fair value be the way to go? If so, how would one determine the 'fair' value of a holding?

[*]Diversify into other asset classes immediately to reduce risk and volatility. Sell some shares and invest in overseas shares & bonds.

[*]Concede that, as you know little about investing, you will just sell everything right now and invest in cash!
[/LIST]

I am looking to gradually transit my Australian share holdings into an international exposure via ETFs by realising growth and profits. (I am invested already into various Australian managed funds which together with the international ETFs should provide adequate diversification).
And yes, certain aspects of investing into shares are definitely beyond my comprehension. I am retired and used to be good in making money but engaged a stockbroker firm and left investing my surplus earnings entirely to them. The high fees made me eventually removing their services and looking for investment alternatives. I find it easier (less stressful) overlooking managed funds.

 

[frugalcharly]

I personally think we are going to see a share rerating over the next few months so I agree with you to slowly sell down the holdings.

Try to ignore the price you bought them for and look at which shares travelled well the last two weeks, keep them for now and sell off the others.

It doesn't matter if they make a loss as you can use this to offset the gains.

Again, try to wipe from your mind what you bought them for and look at them as they are now. Seriously, otherwise you will keep the crap and sell the shares that are rising.

Thanks Knobby22.
You may wish looking at my response to Junior.

 

[Knobby22]

The chances to fail for these particular companies are probably remote but the recovery may take a while; I personally can't see any other option but to hold until recovery which am prepared to do so.

Honestly, reread what Pixel and I said.
That is the worst thing you can do.

 

[pixel]

Excerpts of my account as at 16 March 17:00:-
BHP - Qty: 1,832, Market Value: $30,795.92, Average Price: $33.64, Total Costs: $61,636.65, Loss: 50.04%
CWN - Qty: 1,250, Market Value: $15,150.00, Average Price: $16.00, Total Costs: $19,998.07, Loss: 24.24%
ORG - Qty: 4,577, Market Value: $22,930.77, Average Price: $15.07, Total Costs: $68,886.89, Loss: 66.71%
The chances to fail for these particular companies are probably remote but the recovery may take a while; I personally can't see any other option but to hold until recovery which am prepared to do so.
[...]
I am retired and used to be good in making money but engaged a stockbroker firm and left investing my surplus earnings entirely to them. The high fees made me eventually removing their services and looking for investment alternatives. I find it easier (less stressful) overlooking managed funds.

Yours is such a sad, yet entirely common story of "financial advisors" raking in high fees for losing most of your money. Their excuse will be that others fared just as badly, and you could've changed to a different fund or advisor. Good on you for eventually pulling the pin on them and taking charge yourself. Open a new chapter and let the past be the past.

What Knobby and I suggested covered more the strategy that you (or your agent, whom you paid high fees to do a good job) should have done at the right time in the past. You can't turn the clock back, but make the best of a bad situation.
Having looked at the stocks on your losers list, I agree that it may not be the best idea to sell BHP or ORG at this very moment. At the very least, they have been paying dividends and will likely continue to do so. Holding on to them will therefore be a defensible strategy - not because you'd pick them today at the price your broker made you pay for them, nor because they are likely to regain your buy price in the near future, but because they may well hold the recent market price or even improve on it. It is the latter that fails to meet Phil Carret's criterion of "strongly negative". Lots of investors have recently been buying BHP and ORG, and for good reason.

In summary, I reckon you're now on a rather sensible path. Just forget what your broker lost for you and start with a clean state of mind. Best of luck

 

[frugalcharly]

Honestly, reread what Pixel and I said.
That is the worst thing you can do.

Your well-intented advice is most appreciated but I choose keeping these particular holdings. Cheers...

 

[frugalcharly]

Yours is such a sad, yet entirely common story of "financial advisors" raking in high fees for losing most of your money. Their excuse will be that others fared just as badly, and you could've changed to a different fund or advisor. Good on you for eventually pulling the pin on them and taking charge yourself. Open a new chapter and let the past be the past.

What Knobby and I suggested covered more the strategy that you (or your agent, whom you paid high fees to do a good job) should have done at the right time in the past. You can't turn the clock back, but make the best of a bad situation.
Having looked at the stocks on your losers list, I agree that it may not be the best idea to sell BHP or ORG at this very moment. At the very least, they have been paying dividends and will likely continue to do so. Holding on to them will therefore be a defensible strategy - not because you'd pick them today at the price your broker made you pay for them, nor because they are likely to regain your buy price in the near future, but because they may well hold the recent market price or even improve on it. It is the latter that fails to meet Phil Carret's criterion of "strongly negative". Lots of investors have recently been buying BHP and ORG, and for good reason.

In summary, I reckon you're now on a rather sensible path. Just forget what your broker lost for you and start with a clean state of mind. Best of luck

Yes, it is what it is - it's no use crying over spilled milk. I'll keep these particular holdings, they reportedly have strong balance sheets and still paying, albeit reduced, dividends. Cheers...

 

[Knobby22]

Good luck. I do think org is coming good.