When is it time to sell?

JohnRo

Strategy - if I think a fund is underperforming after 6 months I will switch to either a fund that is performing well or something I have been keeping any eye on for a while. I find that I do a re-balance every 6 months or so.

That doesn't really compute. Are you saying you hold stuff you're speculating on short term? Otherwise the fund performing well within the portfolio is the one you should be selling (in part) and using the proceeds and/or new money to buy the underforming fund for a cheaper price.

My own take on the valuations of the elements in the porfolio I'm managing is that they are what they are. Who am I to guess what they should be or might be..

It's the ratios that matter, and the certainty that I want to hold a stake in whatever sector/class/region it is, regardless of it's current value.

I'll et rebalancing take care of everything else.

crystal_pixie_2

JohnRo wrote: »

That doesn't really compute. Are you saying you hold stuff you're speculating on short term? Otherwise the fund performing well within the portfolio is the one you should be selling (in part) and using the proceeds and/or new money to buy the underforming fund for a cheaper price.

Ok I see what you are saying but I am not sure about investing in funds that are not performing even if you can buy them at a cheaper price? Maybe I am missing something here.

No I don't speculate on a short term, but I suppose I only give a fund 6 months to come up with some sort of return (perhaps I am being a little ruthless - again I am still learning).

I do have funds that I watch for a few months to see how they are performing. HL allows you to swap funds, so I tend to do this if I feel a new fund would perform better.

Hope that makes sense.

JohnRo

It's the psychology I'm interested in, the way you've written it sounds like sell cheap and buy expensive, that might work, if you're lucky and depending what you're buying and selling and when but it sounds a lot more like speculating to me.

Especially mentioning six months as a criteria for making any buy or sell decisions. Investing would be typically holding for 5 years plus and rebalancing perhaps annually.

I'm generalising, so this isn't aimed at you specifically, but I suspect a lot of the investment decisions made by people relate to psychological attitudes to cash, if holding cash is your default position, if it provides the comfortable relaxed feeling, then perhaps dipping into investments feels more like playing a slot machine, stressful, temporary and all about trying to make a quick cash killing then escaping back to safety with the loot before the bonanza ends.

For me holding as little cash as necessary to maintain my humble existence and then holding enough to provide a useful slush fund for efficient investment purposes is my default position. The cash itself is simply the means to an investment end to help the management and expansion of a balanced investment portfolio.

I'm not aiming to escape my investments with an opportunistic cash pile profit, I don't want any more cash than I need, I don't particularly like banks, the fiat pyramid scheme or the crooks running it, I'd much prefer holding tangible assets that might fluctuate when measured in bank tickets but which act as an alternative. Equities are far more economically productive and viable as a vehicle for preserving wealth than holding piles of increasingly worthless pyramid scheme bank tickets.

racing_blue

JohnRo wrote: »

Equities are far more economically productive and viable as a vehicle for preserving wealth than holding piles of increasingly worthless pyramid scheme bank tickets.

True in 2003-7, 2009-14 but not in 2000-2002 and in 2008

I am aware that you know that!

Ryan_Futuristics

JohnRo wrote: »

I've topped up my holding in it this week, current holding was showing +84% but the top up is a significant addition so that return will be hammered down by a fair chunk when the deal goes through. I see this as a safe long term investment barring short term volatility, likewise AXA's Global Tech. and Health which are on a more modest +21% & +42%

Together they're 15% of the total, each equally split in my otherwise tracker only portfolio. They're also far and away the best performers in the time I've held them although the trackers have been rebalanced a few times so their return % is stifled.

I'm often reluctant to top up when something's going that well - but it's been such a fantastic sector for a while ... although I fear any bad news in the US economy (such as a rates hike) could wipe 30-40% off

Here's the way I'm investing in BioTech:



Between 2005 and 2011 it's less than spectacular - and you'd get all the usual problems trying to time when to enter and exit the market

But the kind of trend it's on now is clear - it's well above its SMA 300 ... But I will be aiming to sell as soon as it's back below its SMA 300 on the monthly rebalance date

Market timing's difficult because you do get these false Sell signals ... So rather than trying to time one sector, you'd simply stay invested in sectors that are on the clear uptrend, and otherwise move to cash

I do agree BioTech will be a strong sector for a very long time, but valuations may still have to 'correct' a number of times along the way

coastline

I'd be tightening up that average when a share is moving at such a pace...something like the 50 day MA.
That 300 MA seems a mile away...looks around 30% from 770p...you can always buy back in...well thats me anyway.

http://www.iii.co.uk/investment/detail?type=chart&display=chart&code=cotn%3ABIOG.L&it=leit&timeframe=1y&index=&versus=&linetype=line&overlay=SMA_50&overlay2=&overlay3=&overlay4=&indicator=&indicator2=&indicator3=&indicator4=&chartwidth=500&buylines=on&triggers=on&Go=Plot

Thrugelmir

racing_blue wrote: »

Difficult to know when bad news fully priced in - Tesco up 30% in the last few weeks

And the question in my mind would be why? On the face of it appears to be down to private investors speculating. There's been no fundamental change in the business that warrants such a price movement. Many people do appear to gamble rather actually research and rationalise their investment decisions. All in the hope of a quick buck. Rather than taking a long term view.

Glen_Clark

Thrugelmir wrote: »

And the question in my mind would be why?

Probably the short sellers having to cover their positions.

Thrugelmir wrote: »

There's been no fundamental change in the business that warrants such a price movement.

I beg to differ. The fundamental change is downsizing and stopping the new store openings, to recognise the fact that as the gap between rich and poor grows wider, all the middle of the road grocers including Tesco are losing customers at both ends. This will of course necessitate big write downs - short term pain for long term gain. Wheras in the recent past everything has been about maximising declared profit in the current quarter.

Ryan_Futuristics

coastline wrote: »

I'd be tightening up that average when a share is moving at such a pace...something like the 50 day MA.
That 300 MA seems a mile away...looks around 30% from 770p...you can always buy back in...well thats me anyway.

http://www.iii.co.uk/investment/detail?type=chart&display=chart&code=cotn%3ABIOG.L&it=leit&timeframe=1y&index=&versus=&linetype=line&overlay=SMA_50&overlay2=&overlay3=&overlay4=&indicator=&indicator2=&indicator3=&indicator4=&chartwidth=500&buylines=on&triggers=on&Go=Plot

Funnily I've been thinking the same thing (and with Indian Mid-Caps, up 84% or so in a year)

I do go 150 for more volatile markets like China - (possibly worth splitting the investment in two and moving one part out at the 50 point as a precaution)

I've been keeping at eye on relative strength with BioTech too, which seems to give very similar signals to SMA 50 ... Then potentially get back in a month later if it was just a blip

Thrugelmir

Glen_Clark wrote: »

Probably the short sellers having to cover their positions.

Not according to the registrars.

I beg to differ. The fundamental change is downsizing and stopping the new store openings, to recognise the fact that as the gap between rich and poor grows wider, all the middle of the road grocers including Tesco are losing customers at both ends. This will of course necessitate big write downs - short term pain for long term gain. Wheras in the recent past everything has been about maximising declared profit in the current quarter.

And the relevance to this for a 30% rise?

Tesco's margins will be lower in the years ahead. Never be as profitable again in the future.

Like Lloyds was the topic of discussion 5 years ago. Over time the noise will die down. As it's going to take a while to turn this juggernaut around and refocus the business back on what it does best.