How do you guage when to sell/switch?

Nine_Lives

So i was helping my brother out with his Hargreaves Lansdown S&S ISA as some may remember after paying an IFA to do my own.

We're both the same amount of time in (started in Jan) & both deposit roughly the same. The IFA is handling the wife's & my ISAs. I am -£42.25 on what i've invested whereas the wife is -£44.86.


I've pretty much been managing my brothers for him (though don't profess to know what i'm doing) & he's a combined +£38.89 / +3.85%. +4.89% with one fund, +2.81% with the other.



Now don't get me wrong (& i'm sure some are likely to ignore this bit) - i know investing is for the long term, not just 11-12 months, but this made me wonder about this question.

After about 4-5 months he was in the minus. Now it's raised. It made me wonder - at what point do you sell, or rather, transfer?

His are:

First State Global Emerging Mkt Leaders Class A Acc
Jupiter Merlin Balanced Portfolio Acc

I don't know what going on in the world affects those really, so wouldn't know when to transfer until it'd likely be too late. Just ...... how can you tell? I'm aware there's no 'answer' as such, as it's all crystal ball territory, but you must base your decision on something.

westy22

In my humble opinion both of those funds are 'keepers' - if fact, I am currently buying quite heavily into FS GEML as I think that it is set to outperform over the next few years and I am buying it in preference to Aberdeen EM which has served me very well in the past. DYOR, of course!

Linton

In my view all funds are keepers. When one buys a fund, one buys it for a reason as part of a wider strategy and timescale. Possible reasons could be to track the FTSE100, to provide a steady income, to provide better than average performance in a particular sector, to provide moderate but consistent growth etc etc. Possible reasons to sell would be if there is reason to believe a different fund will meet the objective better, or a change in strategy removes the need for the objective.

The two funds mentioned are very different. The First State fund is aiming at high returns in a rapidly expanding sector at the cost of high volatility. The Jupiter fund aims to reduce short term fluctuations at the cost of possibly reduced long term returns. It isnt clear to me what strategy and timescale would result in the decision to have these funds and only these funds in a portfolio.

Nine_Lives

Something westy said made me think -

I didn't make the thread to discuss specifically those 2 funds. I was more 'generally speaking'.


On what you said Linton - there was no real strategy. The thinking behind the Jupiter Merlin one was having one of the Jupiter Merlin funds recommended based on his aim of medium to medium/high risk. We just selected that one out of the other JM ones at random really.

As for the First State fund, it was in the 150, recommended, i think it'd dipped at the time but was showing a slow climb on the graph, so we or rather he, lumped in for it.


I've never tried to make out like i understand how to select funds. I've always said from day 1 that i don't.
Other people seem to be like, ahhh i can see the east rising in the next year, so i'll buy some Asia funds. Technology is going to do well in x-years time & their prices are rock bottom right now so i'll buy like a madman.
I can't do any of that & have always said this. It hasn't changed any.

jimjames

I certainly wouldn't be selling after a few months. I aim to buy & hold. The most recent sale I made was bought between 1998 & 2001 and only sold to put the money inside an ISA.

Thrugelmir

Nine_Lives wrote: »

After about 4-5 months he was in the minus. Now it's raised. It made me wonder - at what point do you sell, or rather, transfer?

I might even view it as a buying opportunity. I buy and hold long term. So I let the fund managers make the transactional investment decisions. My aim is to have a broad portfolio that overall will increase in value.

coastline

If you've got enough cash invested to make switching pay then you might be able to guage changes in the markets.
Heres something I posted a while ago...the USA seems to be the leader in general and the rest follow...so if they have a growing economy and they are adding jobs then the market is up...negative growth and shedding jobs...market down..

http://forums.moneysavingexpert.com/showpost.php?p=56168609&postcount=11

Thrugelmir

coastline wrote: »

Heres something I posted a while ago...the USA seems to be the leader in general and the rest follow...so if they have a growing economy and they are adding jobs then the market is up...negative growth and shedding jobs...market down..

The US markets are the most closely researched and followed. So little opportunity of ever finding value. Personally I prefer Europe where there are plenty of solid blue chip co's at decent yields.

srcandas

I'm not convinced that the markets are pre priced. There are large percentages of market's capitalisation that is fixed or very slow moving. Markets rather than being pre priced are often very slow to react in real terms (as opposed to market makers knee jerk reactions which simply create short-term buying and selling opportunity )

This is why IMO the average investor has as much chance, if not better, of making money as any restricted fund manager - restricted by geographic region, sector or investment type (e.g. bonds, equity, etc.).

Just one example but take the Tesco advice given by various analysts that it represents a good longterm growth opportunity. We are much more than 6 months on and the shares have not responsded. yet. Six months should be time enough for anyone to make a decision;)

But clearly if you are in globally spread funds invested across sectors and even investment types then these factors are less relevant.

In reply to the OP I always sell and buy for specific reasons. I might be wrong but that doesn't worry me. After all the experts often are!. But I never buy and sell through panic - well I hope not.

Just my two pennies worth.
:beer:

gozomark

you sell/switch when the alternative is more attractive

dunstonh

Trying to guess the market ends up in failure as much as it does success. More experienced investors may get lucky more often or the less greedy investor who is happy to protect gains made during growth periods and reinvest back in negative periods may show longer term gains (relevant to their risk profile as a more cautious investor may sell up earlier than a higher risk investor who may leave it too late by mistake or the cautious investor may sell up too early and miss out on significant gains or even go back in again just to see it fall shortly after) but most who go chasing returns are likely to end up with less.

Personally, you invest knowing there will be ups and downs. You dont know when they will happen or how small or large the increases or decreases will be. So, if you don't know it seems futile to try and time something you cannot predict. Instead you should invest to your risk profile and rebalance periodically. Rebalancing will allow you to take gains from areas that have outperformed and place them into areas that have either underperformed or are less volatile.