When do YOU sell?

[Sir Osisofliver]

i was wondering when somebody would point out the 'other' side.

so really as a trader i would sell the stock ( not necessarily CBA say) take the profit and use the extra capital to reinvest at a later date (even if it might be at a higher price) because you're not playing for large point gains over a long term, more likely just short gains over the short term compounding more regularly. yes?

Close enough. Don't forget that compounding can be negative as well (Ie a string of losses - can't get em right all the time).

vs and investor who will continue to add to the quantity of stock that they have and then when the time is right sell ( for whatever reasons it may be, i'm just saying sell cos otherwise there's no change and the stock continues to be held) making a large profit because of the price difference several cycles ago vs the price now (eg the $2 1992 price vs the blah.. 2020 $80 price)

Yeah thats how I like to conceptualize it.

i understand the logic behind both of these positions and naturally Sir O has the right in saying that doing it properly no doubt takes a much higher level of effort, vigilance and competence to pull off correctly. But just in my situation one of the reasons why I was looking at the sell in the first place was because I have so few shares at this point in time.

30% on a $1000 investment is still 30% whether that investment is made holding 50 shares or 50,000 shares of the underlying. I wouldn't get hung up on the number of shares you have, just think of it as the size of the position and whether it is weighted to do what you want to achieve. Berkshire Hathaway shares trade at $127,440 USD - do you think you need lots of them to make a profit?

to this i will disagree, not because i'm some closet whizz kid but I'm not going to be hard on myself here. What i lacked was a/ knowledge and b/ interest in these things during this time. These were bought by someone else for me then, and i had no interest in keeping with it or anything to do in the share market.

sorry for the massive post.
I'm really enjoying this discussion though.

So move forward with education. Don't deride yourself about the past - you can't change it, just move on - but move on knowing the reasons why you are making your decision.

Cheers

Sir O

 

[ChaoSI]

30% on a $1000 investment is still 30% whether that investment is made holding 50 shares or 50,000 shares of the underlying. I wouldn't get hung up on the number of shares you have, just think of it as the size of the position and whether it is weighted to do what you want to achieve. Berkshire Hathaway shares trade at $127,440 USD - do you think you need lots of them to make a profit?

Sir O

naturally 30% remains constant regardless. but 30% of 1000 is a lot different from 30% of 100 000. and just looking at it in terms of time held vs amount gained.

my goal this year is to increase the portfolio (through profits, not counting me putting say my piggy bank money in)

and i'm not berating myself over the lack of education just acknowledging it that's all

 

[Tysonboss1]

That's assuming 2 things
1/ that i have an income ( i do but just pointing it out)
2/ that i don't already spend less than i earn ( which i do)

so if that's the case then *hypothetically* wouldn't it be reasonable to try and earn more money if there's a chance?

So if your spending less than you earn, your generating savings, why is your portfolio so small.

All I am saying is when you have a really small portfolio, you may get ahead quicker by tweaking your earning/spending habits rather than your investment habits.

 

[Tysonboss1]

naturally 30% remains constant regardless. but 30% of 1000 is a lot different from 30% of 100 000. and just looking at it in terms of time held vs amount gained.

my goal this year is to increase the portfolio (through profits, not counting me putting say my piggy bank money in)

and i'm not berating myself over the lack of education just acknowledging it that's all

The dividends are a continuous profit stream, to me it's ok if the capital gains are lumpy. If fact all though it is pleasing to see the share price of companies I own rise because it gives me positive feed back that I was right in my ideas about the company,

I would much rather see lower prices, I over time I would do better if the stock price fell, or atleast stagnated for a longer period.

Your goal might be to increase your portfolio through profits, but the stock market doesn't care what your plan is. A portfolio of Good Businesses bought at good prices WILL produce good returns, without fail over time. But in such a short period as 1 year very little changes compounding takes time.

Remember compounding has to happen inside the company before you lasting results in the shareprice.

 

[ChaoSI]

So if your spending less than you earn, your generating savings, why is your portfolio so small.

All I am saying is when you have a really small portfolio, you may get ahead quicker by tweaking your earning/spending habits rather than your investment habits.

Like I said before I wasn't interested until recently. Besides just cos there's savings doesn't mean I wanna put it all into shares no? Right now I've put in what I've wanted to with a view of maybe adding more later. The question isn't about what I wann add to it now it's about deciding what to do with what I already have. The impression that I'm getting is that you're saying if I have a small portfolio there's nothing I can do with it.... Which isn't true of course. What may be too small for you might just be what I can manage?

 

[Market Depth]

Nothing wrong with sellng a stock for a profit, no matter what the stock is, or what the profit amount is. You'll never go broke whilst making a profit. You could for example, just sell your initial purchase amount, and leave the remaining on the table, and use the money to buy into another opportunity, and it may well do well, and you can do it again. The flip side is it may not do so well, hence you'll need to make another decision about selling. The more stock you have the more selling decisions you'll have to learn to make.

Selling can be the hardest decision to make. Theres's no 'Black and White' answer to say when, everybody will be different. There's only one person you need to make happy about the decisions and that's yourself.

 

[Myse]

This is a commonly asked question, but generally, in my opinion, if you are satisfied with your profit margin on your stock, I'd realise that profit straight away and either wait for another opportunity to come by or use your increased capital and trade other stocks you've had an eye on.

You should consider that, even though you're up 20% or 30% etc. it's all JUST on paper, your profit has not been realised yet! Always consider that.

Hope that helps.

 

[Tysonboss1]

Like I said before I wasn't interested until recently. Besides just cos there's savings doesn't mean I wanna put it all into shares no? Right now I've put in what I've wanted to with a view of maybe adding more later. The question isn't about what I wann add to it now it's about deciding what to do with what I already have. The impression that I'm getting is that you're saying if I have a small portfolio there's nothing I can do with it.... Which isn't true of course. What may be too small for you might just be what I can manage?

The reason I brought up about working on your saving habits is that I have seen friends of mine decide to get into the stock market with the aim of building wealth, They get a $1000 tax refund and buy some shares and then sit back and think thats it, they are set they own shares and in a few years life should be all cheese and biscuits.

The point I was trying to make, is the same point I try and make with them. if you only have a small portfolio of say $1,000 - $10,000. You are going to get ahead much quicker by just saving and adding more funds into the portfolio.

For example if you portfolio is $1000 you could spend a couple of years micro managing your portfolio taking larger risks and all that will happen is ( if your lucky ), you'll turn $1000 into $3,000 (and maybe teach your self some bad habits along the way).

but if you just decided to save an extra $250 a week you would be at $3000 in just 8 weeks.

I don't know the ins and outs of your situation, but that was the point I was trying to make.

 

[Julia]

Considering that Trading and Investing are two completely different things, why would you not make the distinction. I think it is very applicable to this thread, which is about when to sell.

It probably depends on your semantic definition of both 'trading' and 'investing'.
You are very specific in your quest to buy what you consider to be undervalued companies and (I might be wrong here) you seem to consider that the only definition of an 'investor'.
I, on the other hand, am happy to consider myself an investor in a stock for as long as it's going up, i.e. I will let the profits run, but that wouldn't stop me trading in and out amongst dips and rises. Nor would it stop me selling in a downtrend.
It's still a valid form of investing.
Probably best not to get too hogtied to labels.

Selling can be the hardest decision to make. Theres's no 'Black and White' answer to say when, everybody will be different. There's only one person you need to make happy about the decisions and that's yourself.

Yep. And, whilst you're very focused on what you might do with the profits, Chaos, you don't seem to have made any decision about what to do about those stocks in the red. What's your thinking there?

 

[Synergy]

This has been great reading. Interesting to get ideas from people with various strategies and viewpoints on the market.

My views on selling in the simplest form...

1) Sell if the price has fallen (or you think the price is going to fall) to a point that doesn't fit your strategy.

2) Sell if you need funds for what you think is a better opportunity.

Both rely on having an opinion on price direction.

For me, I hide behind and trust a mechanical strategy. Something I've developed, understand and am comfortable trading. The decisions are made for me, but at the same time by me when i created the rules of the system. Selling is pretty much a case of doing what i'm told - because I know that's what works over the long term, hopefully.

In your case - you don't know what does and doesn't work for you. Holding CBA forever will probably work to some extent, but I suspect that you're looking for more than this, or you wouldn't be thinking about selling.

I'd suggest thinking about tolerances and timeframes. Some people will hold CBA through a 20% downturn and not be concerned. Some will hold over a 3 year downturn and not be concerned. For others, 5% and 2 weeks would be enough to have them feeling uncomfortable. Where do you fit here? I think this is probably something that most people have a natural sweetspot for. Somewhere they just naturally fit, and finding it will probably help you find a method of some sort. What ever your method, you need to be comfortable.

A couple of other ideas,

Try to look to the future in your trades. Past performance is often an indicator to future performace, but it's the future that counts for you. Thats what you can control. A trade might be well in the red or well in profit, but if it's about to rise for some reason there's no point selling.

If you have a very small amount of funds to play with, consider adding any savings you have. I think you need to be dealing with enough money that you consider each decision as important + minimising the effects of brokerage. Your attitude seems good here though.

Either way, I think you need to have some beliefs about the market (and a general plan to trade those beliefs) to make decisions. Gut feels can be ok, but they normally come with experience.

As for CBA, it's certainly at an interesting point.

 

[Tysonboss1]

It probably depends on your semantic definition of both 'trading' and 'investing'.
You are very specific in your quest to buy what you consider to be undervalued companies and (I might be wrong here) you seem to consider that the only definition of an 'investor'.
I, on the other hand, am happy to consider myself an investor in a stock for as long as it's going up, i.e. I will let the profits run, but that wouldn't stop me trading in and out amongst dips and rises. Nor would it stop me selling in a downtrend.
It's still a valid form of investing.
Probably best not to get too hogtied to labels.

No Julia, your capital management operation in which you descibed it pure trading.

What this video it explains some of my mindset, skip the first 1min

 

[Julia]

No Julia, your capital management operation in which you descibed it pure trading.

Let's just agree that that is your opinion, Tyson.

Definition of investing:

the act of investing; laying out money or capital in an enterprise with the expectation of profit

Simple as that. No need to complicate it any further.
By all means define yourself with your favoured term of 'value investor', but please don't tell others that if their approach differs somewhat they are therefore 'not investing.'

 

[Tysonboss1]

.

I'd suggest thinking about tolerances and timeframes. Some people will hold CBA through a 20% downturn and not be concerned. Some will hold over a 3 year downturn and not be concerned. For others, 5% and 2 weeks would be enough to have them feeling uncomfortable. Where do you fit here? I think this is probably something that most people have a natural sweetspot for. Somewhere they just naturally fit, and finding it will probably help you find a method of some sort. What ever your method, you need to be comfortable.

The first 1 Min of this video is on this topic exactly.

.

 

[Wysiwyg]

What this video it explains some of my mindset, skip the first 1min

The lady in the video said "It's simple but it's not easy". In other words just anyone isn't allowed through. Why aren't there millions of Buffet's manifesting?

 

[Tysonboss1]

Let's just agree that that is your opinion, Tyson.

Definition of investing:


Simple as that. No need to complicate it any further.
By all means define yourself with your favoured term of 'value investor', but please don't tell others that if their approach differs somewhat they are therefore 'not investing.'

Value Investor is just one class or sub catergory of investor,

Just as a trend follower is just one form of trader.

 

[Julia]

Tyson, I have no idea why you seem so determined to insist your definition is the only correct one. Or why labels mean so much to you.

I disagree with you. And I have nothing more to say about it.

 

[Boggo]

Value Investor is just one class or sub catergory of investor,

Just as a trend follower is just one form of trader.

Which class are long term TLS holders in Tyson ?


My KISS principle understanding...

An investor is someone who trusts others (company boards/managers/accountants etc) to manage their money, their only decision is which company will do it by buying a portion of the company (eg Telstra "investors") and then hoping for the best.

A trader is someone who takes responsibility for their money and has the ability to make decisions that may be influenced by, but are not dependant on the ability (or inability in the case above) of others to act in their best interests.

I don't think that it is any more complicated than that.

 

[burglar]

Berkshire Hathaway shares trade at $127,440 USD - ...
Cheers

Sir O

Warren Buffett, realising not everyone can afford Berkshire Hathaway shares, started Berkshire Hathaway ordinary shares, Class B, at a fraction of the price!

BRK.B USD$84.74

 

[Tysonboss1]

Which class are long term TLS holders in Tyson ?

I don't know I haven't interveiwed the majority of them to ask them the reasons they bought. Maybe longterm internet boom speculaters banking on telstras profit sky rocketing as we headed into the internet age. or people that had no clue and were buying somthing thinking they were making a wise investment but really they were over paying by almost 3x.

Telstra is the perfect example of my you must conduct some analysis about what you are buying before you buy. It is a perfect example that value investment theory works, and that over time stocks revert back to fundamental value.

They are not value investors thats for sure, No true value investor would have paid such a premium for such low returns on equity, Alot of value investors may have taken a position in recent times though.

 

[ChaoSI]

lol never thought this thread would get so big

Yep. And, whilst you're very focused on what you might do with the profits, Chaos, you don't seem to have made any decision about what to do about those stocks in the red. What's your thinking there?

at this point i have no definite plan that i reckon would recoup the losses in the short term so I lose nothing by leaving them as they are, for now anyway. Should an opportunity that i feel would help even things out come along then yeah i'll probably sell for whatever price and jump ship as it were.

Value Investor is just one class or sub catergory of investor,

Just as a trend follower is just one form of trader.

does it really matter what the label is? end of the day you all earn money buying and selling shares regardless of time spent holding them or methods employed?

Nothing wrong with sellng a stock for a profit, no matter what the stock is, or what the profit amount is. You'll never go broke whilst making a profit. You could for example, just sell your initial purchase amount, and leave the remaining on the table, and use the money to buy into another opportunity, and it may well do well, and you can do it again.

this is what you were talking about in that other thread i asked questions right M D ?
if i removed the initial that would be 3/4 of the 45 shares... leaving me with like... 12
would that be worth it? I really like and understand that principle and it is an excellent way of using "their money" similar to only using your winnings at the casino to gamble.
Do you think that it is still effective that way irrespective of the scale?