When do YOU sell?

[robusta]

i've noticed a lot of you big players here have much deeper pockets... much like a trenchcoat...
whereas i'd be closer to a pair of boardies....

A lot of bigger players here (and no I am not one of them yet) started out with not much at all.

Just get that compounding working for you and you will get there.

 

[Bill M]

another question for you guys. I've never been checking my stocks constantly when the market closed and i noticed something rather odd.
I was looking at the quote for CBA on commsec keeping an eye on the prices cos it was nearing my sell point
sell was roughly 53.93 and buy was 53.92
and after the market closed all of a sudden i noticed that the buy price was 56 all of a sudden .. (it's since .. changed back to 53.something)
sorry my question is all over the place but just wondering what I saw that's all

thanks.

You need to learn about the pre market open and close, a good place to start is here:
http://www.asx.com.au/products/calclate-open-close-prices.htm

About CBA, I bought them originally in 1996 for around $10.45. Since then they have been to $66 and then through the GFC it crashed down to $26 but instead of panicking and jumping all over the place I bought more at $26, fast forward 2 years and they have doubled and throughout that whole time I got nice big juicy dividends.

I currently hold CBA and I won't be selling for a while yet. I think it has the potential to hit $60 but in reality anything can happen so in your case you must do what you feel is right. I can afford extreme ups and downs and maybe you can not.

As for selling in general, I have sold after 2 days at times because the stock went up for no reason at all and it was too easy to pick up a profit so I sold. I also sell for the same reasons as ROE, please refer to his post here. I wish you luck.

 

[Julia]

hahaha is that all i have to do? well.. THANKFULLY i can do that so PHEW!

Don't imagine you have to complicate everything to be successful.

 

[ROE]

With CCV, FGE and CCP your going to be able to book in a lot more than 15% for FY11 ROE

Its the big gains like this that allow value investors to be patient...who knows, the next few months may involve sitting on cash until an opportunity arises..but because of these big gains...the average return over a number of years is sure to be pleasing!

Gain like that guarantee I get decent compounding return on the whole portfolio even during the darkest day of the market ...

I'm not really into getting massive return or get rich fast in the market, compounding will take care of that for me...

I care about capital preservation with reasonable return....

The Great General Sun Tsu used to say
“Invincibility lies in the defence; the possibility of victory in the Attack.”

so sit on cash and defense when there is nothing great to buy and you are invincible
when you are sure of Victory go and buy stocks

 

[ROE]

A lot of bigger players here (and no I am not one of them yet) started out with not much at all.

Just get that compounding working for you and you will get there.

"A journey of a thousand miles begins with a single step."

Very true, most people dismissed compounding because they are too impatient
you can only start to see the real crazy effect of compounding after 10 years.

Let me demonstrate this simple concept for you it work for me to perfection
let say your family earn 100K a year ..you can use any number... but nice round figure easy to calculate.

you stack 12% away for investment and saving...first year 12K save and assume you get average return of 7.5% a year ... most people can do better than 7.5% if they put in a bit of effort...so the journey start, by the next year you have $12,900 in saving..not hell of a lot and at this first few years your saving is far more important than your return....

fast forward 10 years, you end up with around 200K at 7.5% compound a year
now this is where the magic happen

200K is about 2 times your income .. you need to get to two times of your family income....what's 7.5% of 200K ? that is around $15,000..

hello $15,000 is $3000 more than you save annually from 12% of your 100K
so if you keep that up you save $27,000 a year from year 11 and more than half of that come
from return on investment...if you can save more well the sky is the limit...

that why capital protection is very important, compounding don't work well with negative number

do start small and start soon, the more time you have the better uncle compounding like you

 

[So_Cynical]

I sell when im comfortable selling...keeping in mind my goals, limited funds, financial objectives and tax implications...i follow my discretionary plan, im surprised that stator says that my net closed profit is only 9.16%.

i probably shouldn't be surprised as im usually exiting at around that level....still stator also says my open profit is 23.21% so after the end of this financial year some of that open profit will get closed and bring up the closed average.

I'm planning on getting reasonably wealthy slowly...lol and its working.

 

[Tysonboss1]

Gain like that guarantee I get decent compounding return on the whole portfolio even during the darkest day of the market ...

I'm not really into getting massive return or get rich fast in the market, compounding will take care of that for me...

I care about capital preservation with reasonable return....

The Great General Sun Tsu used to say
“Invincibility lies in the defence; the possibility of victory in the Attack.”

so sit on cash and defense when there is nothing great to buy and you are invincible
when you are sure of Victory go and buy stocks

"A journey of a thousand miles begins with a single step."

Very true, most people dismissed compounding because they are too impatient
you can only start to see the real crazy effect of compounding after 10 years.

Let me demonstrate this simple concept for you it work for me to perfection
let say your family earn 100K a year ..you can use any number... but nice round figure easy to calculate.

you stack 12% away for investment and saving...first year 12K save and assume you get average return of 7.5% a year ... most people can do better than 7.5% if they put in a bit of effort...so the journey start, by the next year you have $12,900 in saving..not hell of a lot and at this first few years your saving is far more important than your return....

fast forward 10 years, you end up with around 200K at 7.5% compound a year
now this is where the magic happen

200K is about 2 times your income .. you need to get to two times of your family income....what's 7.5% of 200K ? that is around $15,000..

hello $15,000 is $3000 more than you save annually from 12% of your 100K
so if you keep that up you save $27,000 a year from year 11 and more than half of that come
from return on investment...if you can save more well the sky is the limit...

that why capital protection is very important, compounding don't work well with negative number

do start small and start soon, the more time you have the better uncle compounding like you

Amen,

When it comes to Investing the Crock Pot Method Beats the Microwave Method.

 

[ChaoSI]

You need to learn about the pre market open and close, a good place to start is here:
http://www.asx.com.au/products/calclate-open-close-prices.htm

About CBA, I bought them originally in 1996 for around $10.45. Since then they have been to $66 and then through the GFC it crashed down to $26 but instead of panicking and jumping all over the place I bought more at $26, fast forward 2 years and they have doubled and throughout that whole time I got nice big juicy dividends.

I currently hold CBA and I won't be selling for a while yet. I think it has the potential to hit $60 but in reality anything can happen so in your case you must do what you feel is right. I can afford extreme ups and downs and maybe you can not.

As for selling in general, I have sold after 2 days at times because the stock went up for no reason at all and it was too easy to pick up a profit so I sold. I also sell for the same reasons as ROE, please refer to his post here. I wish you luck.

i bought it at 27... looking to sell at 54.
i only have a very tiny number of sharesso i figure i'll sell and get the profit and then just keep an eye out for anything worth getting.

i envy you the 10.45 shares dude, if i had a stash of those then yeah i'd definitely be jsut sitting on them and adding it with every dip... but then... if i had a stash of shares at that price... i would've been one seriously savvy 12 year old

thanks for the responses guys! given me a lot to think about..
and thanks for the buffet vid too, it's brilliant how he distills his knack for it down to very simple key concepts...

 

[Tysonboss1]

.

i envy you the 10.45 shares dude, if i had a stash of those then yeah i'd definitely be jsut sitting on them and adding it with every dip... but then... if i had a stash of shares at that price... i would've been one seriously savvy 12 year old

Would you you have had the patience to keep the shares and not sell them for 14 years.
Or when they got to $20 would you have sold them because they had gone up 100%.

Maybe in another 14 years they will be worth $250, and you can tell people the story how you once bought CBA shares for $27, But you sold at $54 cause you doubled your money. Who knows what the future will bring.

But to me selling just because the shares have gone up ( if that is your only reason ) is a poor reason to sell.

 

[burglar]

... (bought it when the gfc just happened so i got it cheeeep ...

I've so enjoyed this thread, I read it more than once!! Hint.

Since you got them so cheeeep, and the yield is on the purchase price, how did you do on dividends?
They must be really good, I'm guessing!
And did you reinvest them???

 

[Wysiwyg]

Where as an investor looks to the asset it's self generate the return, A true investor goes about investing in a single stock just as they would go about buying the whole company.

I notice the day after you posted a Roger Montgomery video about the bad business of Qantas, Qantas posted "underlying earnings before interest and tax rose 175 per cent on last year’s first half". Would a value investor consider Qantas now or perhaps wait to see if consistent year on year profits roll in? The latter meaning paying probably much higher prices if awaiting confirmation. Can a value investor ever buy into a bad company and if so what would be the stop out criteria. A percentage loss or maybe one, two or three bad reports for example.

 

[AlterEgo]

you stack 12% away for investment and saving...first year 12K save and assume you get average return of 7.5% a year ... most people can do better than 7.5% if they put in a bit of effort...so the journey start, by the next year you have $12,900 in saving..not hell of a lot and at this first few years your saving is far more important than your return....

fast forward 10 years, you end up with around 200K at 7.5% compound a year
now this is where the magic happen

200K is about 2 times your income .. you need to get to two times of your family income....what's 7.5% of 200K ? that is around $15,000..

hello $15,000 is $3000 more than you save annually from 12% of your 100K
so if you keep that up you save $27,000 a year from year 11 and more than half of that come
from return on investment...if you can save more well the sky is the limit...

Sorry, but these simplistic calculations are simply not achievable in the real world. It really annoys me when I see calculations such as this to show how great compounding interest is. Everyone always forgets to include tax and inflation in their calculations. If you include tax and inflation, your 7.5% return would be more like 1.5%.

7.5% of 200K is 15K, as you say, but you have to pay tax on that, so lets say you're on the 38% tax bracket, that only leaves you with $9,300 of that 15K. So you're only really making 4.65% on your 200K. But wait, there's more - don't forget inflation. Lets say long term inflation is around 3%, so that leaves you with an effective return of only 1.65%. Doesn't look so good now, does it?

 

[Tysonboss1]

I notice the day after you posted a Roger Montgomery video about the bad business of Qantas, Qantas posted "underlying earnings before interest and tax rose 175 per cent on last year’s first half". Would a value investor consider Qantas now or perhaps wait to see if consistent year on year profits roll in? The latter meaning paying probably much higher prices if awaiting confirmation. Can a value investor ever buy into a bad company and if so what would be the stop out criteria. A percentage loss or maybe one, two or three bad reports for example.

I would want to see evidence of consistent profitability and a decent return on equity.

The airline business by it's very nature is a boom bust industry, Fluctuating passenger Volume and Oil Prices, Constant Price Wars and increased competition. I can't see any airline having a durable competitive advantage. I personally avoid this sector, I would be much more likly to buy the airport rather than the airline.

 

[Tysonboss1]

Sorry, but these simplistic calculations are simply not achievable in the real world. It really annoys me when I see calculations such as this to show how great compounding interest is. Everyone always forgets to include tax and inflation in their calculations. If you include tax and inflation, your 7.5% return would be more like 1.5%.

7.5% of 200K is 15K, as you say, but you have to pay tax on that, so lets say you're on the 38% tax bracket, that only leaves you with $9,300 of that 15K. So you're only really making 4.65% on your 200K. But wait, there's more - don't forget inflation. Lets say long term inflation is around 3%, so that leaves you with an effective return of only 1.65%. Doesn't look so good now, does it?

I am sorry but you sir are wrong and have used simplistic calculations.

If you include franking on dividends and the fact that capital gains tax is differed until the sale and then discounted by 50%, you tax figure is much lower.

And secondly, the 7.5% figure is already such a conservative figure that you could suggest it allows for inflation already.

 

[MACCA350]

I am sorry but you sir are wrong and have used simplistic calculations.

If you include franking on dividends and the fact that capital gains tax is differed until the sale and then discounted by 50%, you tax figure is much lower.

And secondly, the 7.5% figure is already such a conservative figure that you could suggest it allows for inflation already.

Pretty sure the example was referring to a bank interest account, not shares, in which case it's a reasonable statement.

Cheers

 

[Tysonboss1]

Pretty sure the example was referring to a bank interest account, not shares, in which case it's a reasonable statement.

Cheers

The original example given by ROE, on which he was commenting on was actually refering to a share investment. Roe was using an index average gain in his example.

 

[AlterEgo]

Pretty sure the example was referring to a bank interest account, not shares, in which case it's a reasonable statement.

Cheers

Yes, that's how I read it - that he was referring to bank interest.

 

[AlterEgo]

The original example given by ROE, on which he was commenting on was actually refering to a share investment. Roe was using an index average gain in his example.

Well even if that's the case, he has still failed to take tax and inflation in to consideration. Even if the tax paid is less than in my simple calculations, it should still not be overlooked as it can make a considerable difference to the results.

 

[Buckfont]

i bought it at 27... looking to sell at 54.
i only have a very tiny number of sharesso i figure i'll sell and get the profit and then just keep an eye out for anything worth getting.

i envy you the 10.45 shares dude, if i had a stash of those then yeah i'd definitely be jsut sitting on them and adding it with every dip... but then... if i had a stash of shares at that price... i would've been one seriously savvy 12 year old

thanks for the responses guys! given me a lot to think about..
and thanks for the buffet vid too, it's brilliant how he distills his knack for it down to very simple key concepts...

ChaoSI, I know it a temptation to want to sell, but if you can hang in there, there can be rewards. A 27c share can reach A $1.00 or more if its a solid company with potential upside.

As an example my av. buy on BHP is $3.04, RIO, $17.81 and CBA $8.93. So over many years and through all the financial fluctations all is well. Best of luck.

 

[kermit345]

Well even if that's the case, he has still failed to take tax and inflation in to consideration. Even if the tax paid is less than in my simple calculations, it should still not be overlooked as it can make a considerable difference to the results.

If your going to take Inflation into account, then what about inflation of the amount that the family is putting in as well? Their Income is going to increase over time so if they maintain 12%, even if their wages only go up by inflation, your partially counter-acting the inflationary effect on your returns within the account.

Also note, he said family, so you could take this any way you like, which means they could possibly earn 50k each as a mum and dad, lowers the tax bracket slightly. I agree the example was simplistic, but there is also no limitation to the complexity that you can take with it as well. At the end of the day ROE is simply expressing that compounding interest or a return can make a difference over the long term. Also, correct me if i'm wrong, but isn't there now a tax-free portion of interest earned in a bank account to encourage people to have some savings? From memory I believe it was the first $1,000 of interest is tax-free, however I could be wrong here, anyone able to clarify?