Funds & Equities - what's your buy/sell strategy?

brasso

Firstly, I am not asking for advice about specific investments here, so I hope this won't fall foul of the forum gods...

I was just wondering how people approach funds and equity investment. I have a SIPP and at the moment, have about £25,000 invested in 5 funds, purchased within the last 6 months. 3 of them are well in profit, the best of which is 35% up, while 2 of them are down. The total notional profit so far is about 15%.

Just wondering how other people approach change in investment. Do you have 'rules' e.g. sell an investment whose value has increased by x percent? Or decreased by x percent? Sell after x amount of time? Buy extra units in funds that have decreased in value in order to get the extra profit when they eventually go up again?

Or is it all just on-the-fly, using a mixture of tips, market news, research and intuition?

Or do you pay for advice, and if so, has it been money well spent?

Thanks.

cheerfulcat

Hi, brasso,

I use the high yield portfolio HYP for about half of my investments with the intention of holding forever. The more speculative half is invested with a broad theme in mind; when I think that the big picture is changing, I will think about selling. I have found it easier to be a top down investor than a bottom up one.

It's not a good idea to sell just because the price of a share has changed, unless you think that it is now overpriced; I panic sold a fair few shares as a newbie investor, just because they had risen by 30%-40%, only to see them go on to double in price :sad:

When prices decline I tend to buy more. I am comfortable with my investments now and have no problems adding when I think they're cheap.

Cheerfulcat

dunstonh

I would have more funds than you giving a greater range of investment areas. With 25k, 10 funds would be closer the mark. Each one offering something that no other does.

I wouldnt get too hung up on short term issues but would annually rebalance the portfolio to move gains out of the funds that have gone up into the funds that have gone down or not gone up by as much.

EdInvestor

The less trading you do the better. Trading eats up your profits.

I too use the HYP idea for a large chunk of my portfolio, only selling when a share price rises so much (usually over 100%) that the dividend yield no longer meets my criterion. This is not inevitable in a rising market though, the trend at present is for companies to increase their divis when their share prices rise, so you win both ways.:)

I have some value shares, where one sells when the value has evaporated, according to the rules governing value shares. Also some oil shares, just holding them awaiting more developments and more rises in the price. Like CC I try to buy when the market is down and shares are cheaper.

Patience is a very important virtue in investing IMHO.Looking long term, investors rarely make money by clicking on the mouse.

cheerfulcat

EdInvestor wrote:

The less trading you do the better. Trading eats up your profits.

Patience is a very important virtue in investing IMHO.Looking long term, investors rarely make money by clicking on the mouse.

Yes, a very important point.

ReportInvestor

I'm also a buy and hold 'em type with both shares and funds.

I try to increase my investments on market weakness, rather than selling on market strength (easier said than done, I know).

carnet

My portfolios comprise long term core holdings and strategic trading (or satellite) holdings.

Depending on the circumstances (all good investors should have a pragmatic, flexible approach) I will consider using any significant dips to top up my core holdings.

The satellite holdings are there to be traded whenever my research is able to identify other sectors/asset classes with better prospects going forward.

From many years experience, the costs of switching, especially nowadays, are far outweighed by the greatly enhanced returns.

marylee

Well, I do not know about other investors, hubby keep an eagle eye on his investments, but you can bank on it everytime he sells, the price goes up. I am waiting to sell my Gartmore PEP and this is the only who is going down,the rest hubby sold, Jupiter, Scottish Widows, the price seem to go down one day and then up the other. I am giving up on buying them e.g £3000 invested in Jupiter gives us return of £5600 and the same amouont of money invested in S. Widows, gave us £4200 not counting some which has completely disappeared.

It's so difficult to know the right time and what to invest in. I have invested hubby's lump sum from his pension and some you lose and some you win. I do not think we have made much profits. Now, we are both retired, we do not have much to invest, I am quite pleased about it as I do not like buying or sellilng shares, it's an headache. Good luck to you all.

ReportInvestor

marylee wrote:

the rest hubby sold [e.g.]Jupiter.

I'm sitting on a 250% rise since 1995 in the Jupiter Income trust. And I shall continue to sit . Anthony Nutt is still on my Christmas card list.

cloud_dog

brasso wrote:

Just wondering how other people approach change in investment. Do you have 'rules' e.g. sell an investment whose value has increased by x percent?

No. Use a trailing stop/loss on rising shares. That way you can gain from any future increase and also minimise your downside risk/loss.

Or decreased by x percent?

Sometimes. If an investment has been a particular stunning performer, i.e. 100% range I sell half and keep half invested (obviously consideration is given if other opportunities exist, if not then probably go for the trailing stop/loss).

Sell after x amount of time?

Yes and no. Depends on the investment outlook and potential for other investments to perform better.

Buy extra units in funds that have decreased in value in order to get the extra profit when they eventually go up again?

Yes, if the investment is predominantly sound and you are comfortable with it.

Or is it all just on-the-fly, using a mixture of tips, market news, research and intuition?

A bit of everything but you need to do the research, identify the risk and make sure you are happy to invest and possibly loose some money.

Or do you pay for advice, and if so, has it been money well spent?

Never paid for it (investment advice :rolleyes: ) so cant comment.

One other comment I'd like to make, and that is wrt switching investments and the impact of charges in doing so. I suppose we need to differentiate between funds (UT's and OIEC's) and other investments (shares, IT's, etc) but generally I think you need to periodically review your investments and if they are not performing, or performing below an acceptable level in comparison with their peers then switch. Charges are relatively small in comparison to poor performance.

I have to admit to no longer investing in UT’s and OIEC’s because I found switching, purchasing, selling slower that I felt comfortable with and because I couldn’t get the safeguards I can get with stock/shares/IT’s, i.e. trailing stop/loss and normal stop/loss. An example for switching………. I had invested in Fidelity European (a number of moons ago), and very happy I was with it. During my end of 2004 review I noticed the Neptune European was performing well and considered switching half my Fid Euro into Neptune, but didn’t. At the end of 2005 review and over 1 year the Neptune Euro had performed 15% (approx) better than the Fid Euro. Switching may cost you approx 0.25% (for UTT’s / OIEC’s) but your gains can be significantly better. So the moral of my story is by all means bear dealing costs in mind but do not let them be the reason to stick with an investment.

cloud_dog

EdInvestor

Stop losses don't work IME.When a stock is in falling knife/plunge mode, you will usually not be able to sell at your stop loss price, it will overshoot.

Most stocks that do this hit bottom and then bounce back, so even if you do decide to sell, it is often better to wait and get the higher bounceback price.With a stop loss you risk selling right at the bottom.:(

"Top slicing" - selling off a portion of a shareholding when a share performs really well -can be a useful technique if the share is getting too dominant in a diversified/balanced portfolio, but I wouldn't bother unless you have a better candidate for the money.

Just because you sell doesn't mean the share won't go on to be a ten bagger, as many investors know to their cost.Selling too soon is very common.On the other hand, "leave some for the next man" is not a bad principle either.