What do you do when your shares more than double?

grey_gym_sock

gozomark wrote: »

other than for tax purposes (or portfolio rebalancing), what its done is irrelevant - its what you expect it to do in the future that matters

if it's an individual share, another issue is that it may (after it's doubled) be too much exposure (as a % of your portfolio) to the specific risks of a single company. in which case, you'd probably sell part of the holding.

personally, i'd probably do nothing. i'm not saying this is a good idea: it's an observation about what i've done in the past. i've sometimes cut losses, but rarely taken profits.

darkvader

Something my dad has followed for years and also mentioned on MSE

1. Once you double your investment, take out 50% thus getting your original investment back. Use the original for your next investment or park it in an ISA, regular saver, holiday etc - personal choice
2. The remainder is only your gains making more in the market. Do keep a stop loss though. For example, if the value drops by 50%, you will sell out etc

My dad has ended up, very proudly, boasting of the income and shares he has which are literally free. It doesnt work always but it's an idea to keep in mind

Cheers
DV

gozomark

darkvader wrote: »

My dad has ended up, very proudly, boasting of the income and shares he has which are literally free.

Maybe good for the ego, but not necessarily good for the finances.

grey_gym_sock

it's not true, either. if you've sold half your holding, the remainder cost half of your original purchase cost.

jimjames

atush wrote: »

When I have a share that doubles, I sell half and keep half invested. I use the money for another investment usually but sometimes I transfer it out for something special/needed but rarely. A profit isn't really a profit until it is crystallized.

A few times after I have done this a share has doubled again, so I sell half again. When one has done this well I tend to keep what's left and hold for decades ;-)

I've done this in the past and now come to regret it - it was an investment trust share not an individual company but since I sold it carried on doubling and I would now had a very substantial slice of my portfolio in it if I had kept my nerve. Admittedly it could have gone the other way but is less likely for a collective investment.

darkvader

Agree gozomark - You're telling me, a little fedup of hearing it over and over but I have to admit, when managed with a sensible knowledge of the markets, it's definitely good for finances. Pop's got a steady income from 'free' shares and most of these have tripled as well

grey_gym_sock wrote: »

it's not true, either. if you've sold half your holding, the remainder cost half of your original purchase cost.

Did not understand. Did you mean the purchase cost? Obviously you must take that into account. If you invest £100 and pay £20 dealing charges, you double when you hit £250, sell £125 which gets back your principle (either park it in a saver or buy another stock) and the other £125 continues to work for you in the same original share.
Of course, discretion required if the stock climbed too quickly for no good reason and any sensible person will sell the entire £250

Cheers
DV

grey_gym_sock

if your total purchase cost is £120, and you sell half the holding for £125, leaving you with shares worth £125, then the shares you sold cost £60 (because that's half of £120), so you've banked a profit of £65, and the shares you keep also cost £60.

Thrugelmir

As others have already said. When a share has gained in value over original cost. I sell some of my holding and reinvest elsewhere. Primarily I invest for the longer term. So adopt purchase and hold strategy. However as my investments have increased in value I've diversified into a broad range of collective investments with some "speculative" holdings in the mix.

darkvader

grey_gym_sock wrote: »

if your total purchase cost is £120, and you sell half the holding for £125, leaving you with shares worth £125, then the shares you sold cost £60 (because that's half of £120), so you've banked a profit of £65, and the shares you keep also cost £60.

Well you are just looking at it in a different way which does not translate to what you are getting back - when you sell £125 you get back the £120 you invested. Rather than saying its 50% cost and 50% profit, in real money terms, you have got back 'your' investment cost. So practically, by selling 50% of an investment that has doubled, you recoup your initial outgoings - whether its made of only 50% of what you put in is not relevant right? Individual elements that constitute the sale of that amount is not relevant. What matters is you get back what you put in with the remainder invested for free (or taken out and invested somewhere else) - and its not a rare or new way of thinking, its been around for a long time

DV

grey_gym_sock

yes, it is just looking at it in a different way, but i prefer my way of looking at it

if you call your remaining shares "free", it makes it sound like you won't have lost anything if the company goes bankrupt. but you would lose the chance to sell out for the full £250.

in some ways, it's better not to assign separate costs to the shares sold and shares kept, but only to look at the overall return on your £120. when you make the sale, you can at least know that you won't make an overall loss.