Do you 'top slice'?

Strummer22

Simple question, if you've got a winner in your portfolio, be it a fund or shares in an individual company, and it has been on a terrific run since you bought it to the point that it now makes up your largest individual holding, would you sell some to 'lock-in' the profit? This would also have the benefit of rebalancing your portfolio. On the other hand, if it has momentum you could miss out on more profit.

I guess for the most savvy investors the answers would depend on what it was and why it has risen, but in general do you take profit if a fund/share has more than doubled?
In this particular case: I own shares in Vestas, the wind turbine maker, which are up 120% (helped by exchange rate since the brexit vote of course!). The company issues its interim financials next Thursday and I'm worried that the shares look a bit toppy and may fall even on a positive update, should it not be positive enough. They did rise on the day of each of the last two financial reports, so on latest form I could hold. The shares have a P/E of 22 which hasn't changed since I bought them (i.e. shares have risen in step with earnings, which is surprisingly logical for the stock market!).

savings_my_hobby

Stu_N_ wrote: »

Simple question, if you've got a winner in your portfolio, be it a fund or shares in an individual company, and it has been on a terrific run since you bought it to the point that it now makes up your largest individual holding, would you sell some to 'lock-in' the profit? This would also have the benefit of rebalancing your portfolio. On the other hand, if it has momentum you could miss out on more profit.

I guess for the most savvy investors the answers would depend on what it was and why it has risen, but in general do you take profit if a fund/share has more than doubled?
In this particular case: I own shares in Vestas, the wind turbine maker, which are up 120% (helped by exchange rate since the brexit vote of course!). The company issues its interim financials next Thursday and I'm worried that the shares look a bit toppy and may fall even on a positive update, should it not be positive enough. They did rise on the day of each of the last two financial reports, so on latest form I could hold. The shares have a P/E of 22 which hasn't changed since I bought them (i.e. shares have risen in step with earnings, which is surprisingly logical for the stock market!).

Safety first - lock it in.

Strummer22

savings_my_hobby wrote: »

Safety first - lock it in.

Would you sell all or some? Selling just some means those sneaky dealing charges rack up quicker...

bigfreddiel

What will you do when you sell, buy something else? Reinvest? Squander it?

Unless you have a plan leave it.

fj

ischofie1

Personally I just rebalance everything once a year at the same date.
It keeps things simple.

LXdaddy

I follow a strategy of rebalancing that I read (probably on monevator) - rebalance when one of your holdings is more then x% away from the planned allocation. x is the smaller of 5 or 25% of the planned holding.


So something planned to be 50% triggers a rebalance when it either falls to 45% or rises to 55% while something that is planned to be 12% triggers outside 9% to 15%.


Seems to be helping me avoid the temptation to rebalance frequently.

Strummer22

bigfreddiel wrote: »

What will you do when you sell, buy something else? Reinvest? Squander it?

Unless you have a plan leave it.

fj

House buying is on the horizon, so I have reason to be looking to move my holdings to cash. I would potentially reinvest some if I saw a really good opportunity since I probably won't need to put all my spare cash into the deposit (it's already about 40% of the value of houses I'm looking at).

Thrugelmir

Stu_N_ wrote: »

The shares have a P/E of 22

Then the order book is the thing to keep a close watch on. Could be that the market valuation is running ahead of actual performance.

Ifts

I sell to lock in profit and to use up the annual CGT allowance.

Like you say sometimes the share will keep on rising but it can just as easily drop. Last year I sold SPD and the SP has more than halved since, this year I sold EZJ and again the SP has dropped - this was more to do with good fortune than skill! But had I not been prompted to make use of the annual CGT allowance I would still be probably holding them. On the other hand I have sold shares where the SP kept rising afterwards, I think oh well a profit is a profit.

The way I look at it I can always buy back in (for CGT after 30 days), which I have done before and if the shares drop since you sold them you end up with more shares for the same money. If they rise too much I place them in my watch list as hopefully there will be opportunities to buy back in in the future.

But I must admit its harder to decide when to sell than buy... If you are unsure sell half of them.

Strummer22

Ifts wrote: »

I sell to lock in profit and to use up the annual CGT allowance.

But I must admit its harder to decide when to sell than buy... If you are unsure sell half of them.

Ah... I don't own that many shares. :rotfl: They're in an ISA.

I think I still have confidence in this company. I will hold and see what happens on Thursday. A big rise on the interim report and I'll sell half my holding. Based on recent updates the company is growing its revenue from servicing so it's less reliant on new sales which I think makes it more stable.

bigfreddiel

Stu_N_ wrote: »

House buying is on the horizon, so I have reason to be looking to move my holdings to cash. I would potentially reinvest some if I saw a really good opportunity since I probably won't need to put all my spare cash into the deposit (it's already about 40% of the value of houses I'm looking at).

Good reason stick to your plans and good luck fj