By Goh Eng Yeow,
- Setting targets on profit and loss levels, selling enough to take back capital and some profit can take some angst out of making an exit.
- Don't get over-emotional over your shares. If you have lost money because a share has gone down, it can be difficult to let go. But, remember, most of us have only a limited sum to invest, and we should put the funds to good use to maximise our returns. Holding a soured investment stops you from using that money elsewhwere where you may get a beteter return.
- Top-slice your successful investments. If a share is on the share, it is easy to believe that uptrend will continue indefinitely. But, rather than sell off all your shares, what you can consider is to "top-slice" your investment - sell enough shares to take back your capital and some profit. If share price contines to go up, you will still have some exposure to the stock and can make further gains.
It is true that selling decisions are harder to make than buying decisions as buying may give us hope even when we discover that we are wrong and hoping that we soon will be right again. If such under-performing stocks continue to provide us with 'decent' dividend yield that is better than bank FD rate. Yalor How to sell?
Never mind about paper losses and even no more investing fund also never mind.
Is this never mind attitude OK in investing?
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Yalor,
ReplyDeleteI have a few counters with quite good dividend yields (5%-9%) but barely give me any capital gains for many years already. Some of these counters i started to sell slowly. Actually if i still like some of them for dividend yields, i can always buy them again during a market's dip or better still a market crash.
Most of these counters when i sold them, i still make some money like (3-6)% P/A.; After all these years even though i lost some money when i sold them. So you see, dividend yield is very important; sold at a lost still make money P/A. Of course if you want to consider inflation, i am losing money; but still better than "FD" in the banks.
One example is SP AUSnet.
My all time difficult stock to sell was FSL. Bought starting at more than $1, average out, inclusive of dividends to 60c. Finally dump it last week at a lost of around $80k. Dividends were good every quarter so I hesitated with selling the stock. Managed to sell 50L during Mar when the tsunami caused a dip in prices to switch to other stocks. Looking back, if a stock is not performing, dump it the first opportunity you have to minimise your losses. I could have done that, on hindsight, when the price was 48c instead of 38c now.
ReplyDeleteLuckily, gains in all my other stocks more than make up for the lost. Very expensive tuition fees indeed. Managed to dump CitySpring at a gain after their prices started dropping a few months ago.
Enlightened
Yes, in stock investments, you win some, you lose some. But most important of all is your stock's portfolio is net gain. And you should keep on improving your investment "understanding" of the over-all market. So that your portfolio's net gain will keep on improving also.
ReplyDeleteStrongly agreed. Look at your portfolio and measure its performance and don't be too overly concerns over some stock losses.
ReplyDeleteYou don't need to win back in the same manner that you have lost them.