What's happened to my portfolio in the last 2 weeks?!

Glen_Clark

gkerr4 wrote: »

because either your research was flawed, or something has changed.

It could be shares in the worlds top VHS cassette manufacturer?

But that wasn't the reason given for selling it. The reason given for selling it was the price was down. Which is about as sensible as buying a house for £300k then selling it because the price has fallen to £200k

bowlhead99

gkerr4 wrote: »

if i did my research and thought a share was a buy at £3 - bought it - but it then fell to £2 - then either my research was flawed - or something has changed.

Either way, i've messed up and it would be dropped at around the -12%ish mark.

Bit of flexibility there as we have seen, for example a general market dip in the last few weeks - if a share was hovering around the -12% mark in these conditions, id ride the "general market dip" out.

It is easy to make up rules with hindsight and come up with all sorts of reasons why you wouldn't actually drop a share when it goes to -12%. Tell us, what proportion of the 2000 UK companies or 20000 companies listed globally have not had a 12% drop at some point? Even while remaining as companies with potential to do well.

If you followed that rule of dumping every company that ever has a downturn, you would not have any shares at all.

there shouldn't be any "attachment" to a share - they are just bits of paper for trading. getting attached to a share is the road to the poor house.

I'd agree you shouldn't allow sentiment to colour your judgement. So, rather than blindly holding, you can re-evaluate a company at 150p and decide whether you would still buy that number of shares at 150p if you didn't already have them and instead had that much extra cash. The decision might well be to keep them, whether you had originally bought them at 100p or 300p.

out of favour stocks are a good buying opportunity - i agree - but to buy and then the price drop a further 32% means you mis-timed the purchase. Or something changed.

Say for the sake of argument, Glen did "mis-time" a purchase because he isn't a psychic and didn't have the benefit of hindsight when making his purchase decision (no shame in that). If it falls 20% it is evident that he could have bought it cheaper. But he didn't, and what's done is done. So, to arbitrarily now sell it at 88% or 80% or 68% of its start price is completely ridiculous if your analysis based on current information says that it can feasibly deliver a [whatever your target rate of return is] return from its current price of 88 or 80 or 68.

Even if something has changed, you can always reconsider your analysis, account for it, and decide that your holding is just as good, or better, a prospect than was when you first bought in.

Glen_Clark wrote: »

But that wasn't the reason given for selling it. The reason given for selling it was the price was down. Which is about as sensible as buying a house for £300k then selling it because the price has fallen to £200k

Agreed. Markets go up and they go down. Selling something that is down just gives you a loss. What are you going to do, sell out, wait for it to recover to what you paid first time, then buy in again and hope you get better luck second time around?

But seriously, feel free to set a stop loss at -12%, because that will put more shares into the market at a low price, which great for those us who are always on the lookout for bargains.

gkerr4

Glen_Clark wrote: »

But that wasn't the reason given for selling it. The reason given for selling it was the price was down. Which is about as sensible as buying a house for £300k then selling it because the price has fallen to £200k

no - its exactly the same, that IS the reason - if the price drops - it goes - end of.

it means i've made a mistake - even if i can't find it - I've made a mistake and it needs to go.

It doesn't always work - notably I kicked myself over Starbucks a couple of years back and should have found a re-entry point, but didn't.

but in general, this keeps my losses tolerable and my money working. I've traded stocks since 1998 - I've not had a single losing year in all that time. even through a number of bad corrections I've managed to salvage at worst mid-single digit % returns across the year.

you don[t have to listen to me - this is the internet, i don't really care either way - i just disagree with holding stocks at -32% 'hoping' they will double to even just give a modest return.

edit: and you can't compare stocks with houses - you own houses for many many years and they become family homes - stocks are just something to trade to make some money.

gkerr4

bowlhead - your text is massive - i'll have a quick go.

i currently hold 22 stocks across 3 accounts so i do hold shares. On your proportion of shares that have dropped 12% - i have no idea or even slightly care - you are confusing share picking with financial planning - the sell at 12% is part of my financial plan - it has nothing to do with stock selection. I may well continue to watch the share in question and look for a re-entry point - i'm not ashamed to do so.

your second point (and as above) i may well re-evaluate and re-buy in - so if it was a £3 share and it dropped to £2 - then i may well re-buy. But i'd have sold it £2.65ish first.

its not ridiculous - its good financial planning. I've worked hard on this to be determined to sell at this point and its paying me dividends already. I'm not asking you to do it - i don't care if you agree with it or not.

your final point is aimed at Glen Clark - but i'll stick my 2p in anyway. Who says it will EVER recover to what you paid the first time around? it might simply die off? - hence my VHS tapes point.

N1AK

Glen_Clark wrote: »

Just my luck that I bought his losing one because living in England it was the cheapest and easiest one to buy

There's an argument that what's happening could be good for Tesco shares. The threat from discounters, the failure of its US venture, and the need to renovate and focus on its UK presence were all apparent well before. The big fall, change of leadership etc could bring about change for the better far faster than a more gradual decline.

N1AK

gkerr4 wrote: »

you don[t have to listen to me - this is the internet, i don't really care either way - i just disagree with holding stocks at -32% 'hoping' they will double to even just give a modest return.

The point bowlhead was making was that you shouldn't be holding or selling a share based on an arbitrary barrier based on a historical price. If you think a share is a solid pick at its current value then selling it because it was worth more a week ago is irrational; the same is true of holding onto a weak stock because you don't want to 'admit' the loss.

Glen_Clark

N1AK wrote: »

There's an argument that what's happening could be good for Tesco shares. The threat from discounters, the failure of its US venture, and the need to renovate and focus on its UK presence were all apparent well before. The big fall, change of leadership etc could bring about change for the better far faster than a more gradual decline.

Yes, but their biggest problem is beyond their control, (and it isn't just a problem with Tesco)
As the gap between rich and poor grows wider, all the middle of the road grocers are losing customers at both ends.
But I'm still in because I think that is probably reflected in the share price.

bowlhead99

N1AK wrote: »

gkerr4 wrote:

you dont have to listen to me - this is the internet, i don't really care either way - i just disagree with holding stocks at -32% 'hoping' they will double to even just give a modest return.

The point bowlhead was making was that you shouldn't be holding or selling a share based on an arbitrary barrier based on a historical price. If you think a share is a solid pick at its current value then selling it because it was worth more a week ago is irrational; the same is true of holding onto a weak stock because you don't want to 'admit' the loss.

Yes this is the internet and we don't all have to agree, hopefully none of us are so precious that we can't take a point that contradicts our own.

N1AK is right, in what I was getting at. There is no such thing as "hoping they will double to even just give a modest return."

If they have doubled, they have just given a 100% return which is not all modest. It is 100%+ up!

If something has dropped 50% it needs to deliver 100%+ back up to get you back where you started. It was likely a badly timed investment. But it would be ridiculous to say, "oh, there's no point holding that, or buying that, because even if it goes up 100% growth that's a net zero return and I can't afford to take risks for a potential zero percent return.

If you dump it, then *whatever you choose to buy as replacement* will need to deliver 100% return to get you back to zero. There are very few such investments around. You simply need to recalibrate expectations and decide: if I was investing £x today, would I invest £x in deal A with the chance to increase my holdings substantially, based on my assessment of the prospects? Or should I give up and focus on my other opportunities in deal B that could give me a good return too?

People will fall back to their comfort zone in terms of taking new risk. But it doesn't mean they are, or should be, considering the original value at all. They are looking forward at returns from a current valuation. As such, if you buy or hold, say, Tesco from 180p, you should not think "no point holding this stock because after ten years of getting 7% return I am back to 360p which is only zero percent from some historic start price". Instead you may say, "I am going to hold this retailer from 180p for ten years of getting 7% return which will double my money from here and is a perfectly reasonable investment".

As such, dumping a stock simply because its market value is not what you paid for it, is silly.

Glen_Clark

bowlhead99 wrote: »

if you buy or hold, say, Tesco from 180p, you should not think "no point holding this stock because after ten years of getting 7% return I am back to 360p which is only zero percent from some historic start price". Instead you may say, "I am going to hold this retailer from 180p for ten years of getting 7% return which will double my money from here and is a perfectly reasonable investment".

As such, dumping a stock simply because its market value is not what you paid for it, is silly.

....... except perhaps for a fund manager who wants to quietly bury the losses under the carpet, so he can pick another share he might be able to boast about doubling in value

El_Selb

Thanks for all your many comments…. A lot of what you said specific to my losses I guess I knew already, just needed to hear it again (see comfort bit). I think it was probably the first time in my very short investing career that everything went down together and I was looking for a bit of reassurance.

Ultimately – I have to bear in mind what again I knew but Chester reminded me – upward trend wins out in the end though (as long as you don’t invest in VHS tapes) and as I don’t need my money in the next 2-3 of years at least (if I decide to buy a house) – the last 2 weeks isn’t an issue.

It’s all relative, 3% is significant for me now because that’s the biggest drop I’ve known. But sure in my time in the markets there’ll be times I wish my losses were this minimal. Give me a chance to find my way Dunstonh, cripes!

You guys have definitely turned me on to the idea that I should be seeing this as an opportunity rather than a disaster, which clearly it’s not. Although I should probably resist urges to buy something a bit more exciting like Tesco or the Neil Woodford Fund for something a bit less risky like fixed income (haven’t really researched this area yet, always get drawn to the – relatively - riskier stuff!)

PenguinJim – yes those bloody red numbers!!

Ryan Futuristics – I’m going to look into your comments about selling 250 & VLS in particular, as well as a lot of the others here

FYI I bought IP Group at £2.25