What to do when your share hits -10%?

gkerr4

get shot - immediately - you should have had an automatic stop loss with your broker to sell without you even thinking.

your analysis of the fundamentals sounds good, but either your research was flawed, or (more likely) the market has changed,

Buy keeping (especially as you have now told the world your decision) you run the risk of becoming emotionally attached which means you will stick with it looking for reasons "why it will recover" all the way down to <50% value

get rid.

JoeCrystal

Well, I would buy some more if it go much lower but 10% is not really that big loss. I would go more than 25% or in extreme cases, 50% and 75% as long there is some hope that it may recovers.

There are some good use in lowering the cost of per share but sometime it can be a case of throwing good money after bad. Would you buy a company that is almost virtually to go bankrupt... no but would you buy a company that suffered big fall due to some legal disputation that potentially may be resolved, then yes.

As it is, I am not a fan of selling shares, which cost me deeply but that is part of the thrill of investing really? More than a hobby... a very expensive hobby...

Cheers

Joe

Biggles

mr_fishbulb wrote: »

I believe it's still as good an investment as when I bought in

That's all you need to know.

Plenty of shares, esp AIM shares, are volatile lately. Looks as though they recovered a bit today anyway, and are back somewhere around where you bought them.

Don't go selling on a bit of weakness or set tight stop-losses, that's a sure way to losing money.

bowlhead99

gkerr4 wrote: »

get shot - immediately - you should have had an automatic stop loss with your broker to sell without you even thinking.

On a fall of 10% on an Aim share from one year to the next? You are being ridiculous.

If the investment case is still there and the risk/reward still seems sound, what is the rationale to "get shot" / "get rid"? Assuming this comment has been made without a comprehensive review of the specific company involved, it is absolute garbage.

You would easily expect swings of this size on an investment in a basket of smallcap shares and if holding individual shares the volatility could/should be many times higher. Which companies on the stock exchange have never posted a one year 10% price fall? If every time you buy a stock you leave a sell order at 90% of your buy price, you would walk away a loser on pretty much every investment you ever made.

Investments in shares for most people should be seen as multi year holds because in the long run a successful company's profits will be returned to shareholders as dividends or increased share price, while in the short run market sentiment can swing the share price absolutely anywhere.

The only reason a straight "get rid" may be sound advice is if your risk tolerance (mental willingness to accept downs with ups) or your risk capacity (having enough total assets to take a loss) cannot handle the size of the swing you just experienced, in which case, damn right, investing in single company shares is not for you and you should stop it.

gkerr4

10% is too much - then again, i don't (generally) trade AIM shares. and if I did, i'd have no intention of holding for a year or anywhere near that.

lots of good advice for getting into the poor house in this thread!

Keeping share which have lost "50 - 75%"?? - it needs to more than double to break even? - just not going to happen. An Aim share which has lost 50% is more likely to go bust than recover back to levels. I'm not saying it doesn't happen, but it's pretty rare and far too much risk.

You should have sold and used that money to better effect elsewhere. never let more than 2% of your capital be at risk - maintaining capital is your NO.1 priority as a trader / investor as you need it to stay in the game - making good, planned trades is your 2nd priority - if you can maintain this and be disciplined, then making money will follow.

just my 2p
(thats 'points' not 'pence', by my rules :-)

gkerr4

bowlhead99 wrote: »

You would easily expect swings of this size on an investment in a basket of smallcap shares and if holding individual shares the volatility could/should be many times higher. Which companies on the stock exchange have never posted a one year 10% price fall? If every time you buy a stock you leave a sell order at 90% of your buy price, you would walk away a loser on pretty much every investment you ever made.

The only reason a straight "get rid" may be sound advice is if your risk tolerance (mental willingness to accept downs with ups) or your risk capacity (having enough total assets to take a loss) cannot handle the size of the swing you just experienced, in which case, damn right, investing in single company shares is not for you and you should stop it.

this is just unbelievable poor advice - sorry.

yes - you will lose on probably around half (maybe more) of the trades you enter - so cut them at 10% and let the winners run and look to take 20-30+% on the winners - overall you are up.

risk tolerance is EXACTLY my point - you cannot afford the risk of losing >10% or becoming attached to a share which is dropping - if it goes like that (i'll say it again) either your assessment was flawed, or the market has changed - either way, you're a loser.

Fella

Serious bit of advice but probably not the kind that gets taken often; if you track a share's price often enough that you know when it's 10% down then share investing probably isn't for you.

gkerr4

what??? I despair? - do people really buy shares and then not "track" them?

every day - every day you should know what your portfolio performance is and why - was it the market sentiment? was it a profits warning? - spend time and research your shares - not just before you buy them but all the time! - this is investing - its your money. Thats my final posting on this - i can't believe it - perhaps this should be the "moneyloserexpert" forum.

sabretoothtigger

Looks ok on a yearly view, this market is not full of confidence. Why not sell some at the high if so easily worried, dont wait till now to consider lost profit.

Bottom line is the company and a share of it are sometimes not correlated because people sell shares for money and the company's business market may be entirely unrelated to that kind of moneyflow, separate customer base or market cycle

small tech is basically waiting for a take over I guess. Does seem a kind high risk share but at 6 pe and you say earnings are ok, its alot more conventional then most tech.
Security and online use is increasing generally?


I track shares every day but you cant walk like you got grit in your shoe. This is being over sensitive, take profits if you need the money otherwise forget a price. Do you worry when your favourite beer is 10% less, the company isnt reliant on the share price?

Biggles

gkerr4 wrote: »

Keeping share which have lost "50 - 75%"?? - it needs to more than double to break even? - just not going to happen.

So, like Monitise (MONI)? Just a quick selection from my portfolio. I bought at 15p in 2007, it dropped to 3p, when I averaged down, and it's now at 32p.

The OP has done his research, and he's happy with it. It's crazy to set 10% stops on AIM shares, you would lose all the time. If you admit to not knowing about AIM shares, don't pass judgement.