Target share prices

2good

I have a small share portfolio and am not doing too badly with it - by that I mean the value of the shares has increased since I bought them. But I do realise that making money out of all of this is not just about buying stock but selling at the right time.

There seems to be lots of advice on what to buy but not what and when to sell!

How do I find out what the target price is and when to sell? I'd hate my shares to fall in value before I'd got my money back out again!

zag2me

If I knew the answer I would be a very very rich man

Hereward

The target share price is what ever you want it to be.

For example: if you bought some shares at 10p each you might want to hold on to them until they reached 20p each (a 100% increase) and then sell them. If they reach this figure, but you still believe that they have potential for growth you might change the target price to 30p before you sell. if the shares subsequently fell to 15p then you have "lost" 5p per share as you could have sold at 20p, but didn't, but you would have still gained a 50% increase on your initial outlay.

Please note, that the above example ignores any trading costs, you can sell at the instant that the shares reach the target price and that the shares produce no dividend.

cloud_dog

2good wrote:

I have a small share portfolio and am not doing too badly with it - by that I mean the value of the shares has increased since I bought them. But I do realise that making money out of all of this is not just about buying stock but selling at the right time.

There seems to be lots of advice on what to buy but not what and when to sell!

How do I find out what the target price is and when to sell? I'd hate my shares to fall in value before I'd got my money back out again!

If you do some searching you will often find brokers have published a recommendation article and this will have a target price. Having said that I am somewhat sceptical on broker recommendations.

The best thing is to have your own *realistic* target price (as per Hereward), what you can also do, if you chose, is that if it reaches your target but you feel it could go high you could sell a percentage (50% for example) so as to lock in some profit. Obviosuly dealing costs need to be considered.

cloud_dog

gil13

selling is always the hard bit, the winners and losers. if you are going well and have doubled your money for example, look at the time frame, if it less than a year then say a 100% return is excellant by any stretch. the other thing to do would be to decide which ones you might like to put a trailing stop-loss behind, most online brokers have this facility, if the share price moves up just nudge up the stop-loss, this will help you lock in any gains if it goes pear shaped. the other thing is sell some of any given stock to the value of you intitial stake and run the rest for free. But none of this is an exact science, most people will have made some gains in this market, but what happens in 2007/2008, do we move ahead to new highs or do we retrace.

alecpr

I use a number of strategies for selling, three of which are...

1) Use a trailing stop loss, maybe set it 5% below the current price, so that when the share price starts to fall you sell before any real damage is done, setting the stop loss is an art in itself as you don't want to be caught out by pull backs before a further climb. I find this a good strategy with bigger companies where movements are less erratic.
2) Know your company, what they do and what the risk is... should already know things like this from research especially with the small caps. Work out a strategy from this information and there is no need to set a price. For example an Oil Company may be building a liscence portfolio and you may buy at that point believing that the share price will rise when they start drilling the prospects, at that point you may sell without taking the risk of the big pay off if they strike oil or big pull back if the fail. The price in this instance is unimportant you base your decisions on news and what you know of the company.
3) A combination of the two above, where you buy a stock you beleive to be undervalued, maybe using the P/E along with other financial figures as a guide. You set a fair value to sell your shares which again may be based on P/E among other things and sell when you feel the company has reached fair value.

There is also the option of buying with no intention of selling, high yielders like Lloyds and United Utils sit in my portfolio quite happilly gaining in share price and paying dividends year in year out... unless something drastic happens I have no reason to have any exit strategy at all.

Stompa

2good wrote:

There seems to be lots of advice on what to buy but not what and when to sell!

Don't forget that 'when to buy' is also very important.