Selling losing shares?

C_Mababejive

Do you trade online and do you have DRIP set to on with both these shares? That may be the way forward. Online platforms such as TDW dont charge much for DRIP and this will magnify recovery/gains when things turn as they surely will..err,,hopefully..

gkerr4

i believe in stop losses, but 13 and 16% would be right on the cusp of being kicked out - they are bad, but not deadly.

What i do think though, is that holding them 'purely' because you see it as crystallising a loss if you sell, is the worst thing you can do. If you genuinely see them recovering and turning around, then keep them - but don't keep them just cos you can't take the loss.

I can assure you, it gets even more painful to sell them later at -20%, -25% - 30%......

Holding them like this is to hold them for emotive reasons - you can't bare to admit you were wrong with them, that you might have made a mistake, that your research was flawed or that something has changed. Get over it, sell them - you will not be 'right' every time. Trading is a numbers game, some you win, some not so.

one more point - if you are holding them for emotive reasons then the very worst thing you can possibly do would be to buy more in the name of "averaging lower" - it is simply throwing good money after bad chasing losses.

Zippeh

Well I'm glad I didn't sell my Glencore one as they've gone up today and now only 5.79% down!

But my BB ones are now down 22.13% though.

Luckily I have more in Glencore then BB so overall not much change I guess!

I really need to do more reading around this to improve my research abilities.

mike88

Zippeh wrote: »

I guess the reason I'm reluctant to sell is, once I've done so, then there's no chance of clawing back the money lost is there. Whilst I hold them, at least there are dividends and the potential of regaining the loss. The problem with BB is that a month or so after I bought them, they had all the news about accounting irregularities so that battered the share price and a take over for them failed as well! Couldn't have bought at a worse time really!

That is the classic novice investors stance. You should view your portfolio as a whole and not get worked up about individual losses. If a share is performing badly you should have ditched it long before the loss reached 22%.

Credit-Crunched

Zippeh wrote: »

I have some shares in both Glencore and Balfour Beatty which are currently down by 13% and 16% respectively. My question is am I better keeping them in the hope that they go up, or better to sell off an put them into a fund which seems to be performing better?

I suppose my question is more general than that, and it's should you keep hold of shares which have gone down (and not moving much now) and invest in something else, or keep hold? Glencore are ex-Dividend now so I believe I have to keep them until I receive my dividend payment?

Keep them they will go up......or sell them they may go down, they may however stay the same.

Credit-Crunched

mike88 wrote: »

That is the classic novice investors stance. You should view your portfolio as a whole and not get worked up about individual losses. If a share is performing badly you should have ditched it long before the loss reached 22%.

Or purchased more to average out price per share!

I love accounting scandals in my portfolio, made a killing on Tesco's 'slump'

cns06

I would be keeping BBY.

cns06

Just my personal view btw! They are not exactly making any money at the moment but I can see potential.

bowlhead99

mike88 wrote: »

That is the classic novice investors stance. You should view your portfolio as a whole and not get worked up about individual losses

I agree with that. The comments from AlanP and Dunroving are sensible. What is it worth today and if you didn't have it would you want it at the current price. The worst thing you can do is get yourself in a position where you feel the company 'owes you' a certain gain or breakeven.

If it goes down 33% it has to go up 50% to recover. If it goes down 67% it has to go up 200% to recover. What is key to realise is that the company and its directors don't know or care what you chose to pay to buy in. Their goal is not to make you back a specific amount of money. Picking a specific arbitrary exit point just because it happens to be the exact price you came in at, and stubbornly holding on until that day, is a nonsense.

So, waiting for that arbitrary exit point, or waiting for dividends to roll in, to compensate you for your losses to date, is like sitting at a casino table and being $10 down, realising you can get a free whisky if you wait 5 minutes for the cocktail waitress to come past, then losing $400 while you wait. I've done both, but couldn't recommend either.

If a share is performing badly you should have ditched it long before the loss reached 22%.

Can't really agree with that though. If you dive out of an investment just because it's down 10 or 15 or 20% you can easily miss out on the good times that follow, particularly if the fundamentals are still broadly sound.

Investments are inherently volatile because valuation is not an exact science. Most investments appreciate over time, although a few will die of course.
If something was worth having at 100p it will probably be worth having at 78p especially if its long term earning potential is not suddenly now somehow impaired by as much as 22%. To suggest that if something drops by 22% you would have already sold it implies arrogance, impossible foresight, or just short-sightedness

mike88

To suggest that if something drops by 22% you would have already sold it implies arrogance, impossible foresight, or just short-sightedness

That depends. If you've held a share for a long time, the losses continue and that sector of the market is unattractive why hang on in the hope the share will recover? I have been guilty of hanging onto loss making shares for too long. I've lost money on Woolworths and MFI but thank goodness I sold them long before they went under. At times you have to be decisive but never hang on to a share in the hope of recovering losses. That is why it is sensible to have a stop/loss system or at least a system that triggers reappraisal when losses reach a certain level.