Smithson up 18% since launch

BrockStoker

I think it's a valid question, and I'd say that if something has gone up a lot, it's worth thinking about taking profits.


I don't think that this is the time though. If you keep taking profits every time a little part of your investment goes up 18%, then dealing fees will soon add up, and your profits will take a significant hit, especially if it's only a small portfolio to begin with.



With my own portfolio, my strategy calls for taking profits if something has gone up in value significantly, but I usually wait for at least 40-50%, if not more.



For one thing, I find it harder to get my sells right than my buys, so it's not a bad thing to let it grow a bit more, giving more margin for error. I don't know your fund, but if it's a riskier fund, it could easily fall 4-5% between the time you hit the "sell button" and the time at which it actually gets sold. So your 18% could be down to 12% profit, before being further whittled down by charges.


As pointed out, time in the market is important, and it's easy to guess wrong when trying to time the market, so if in doubt it's usually better to do nothing.



It does sound like you might need to re-examine your strategy, and/or make some tweaks to your portfolio. It took me about 3 years to settle on a strategy and get my portfolio the way I wanted, with the help of this forum.

schiff

I'm in a similar position, being in both funds. It's tempting to dwell on the additional money that you are sitting on if you sold, but it's a delightful 'cushion' to have if you don't. You have 4/5 years' worth of cost of living increases built in to today's 'profit' figures.

I remember a saying in the old penny shares days: 'Sell half on a double'. You bought at 2.5p and sold half at 5p. Though I've come to regard Terry Smith and his team with something approaching worship, I doubt that that will happen, however long.......

RomfordNavy

BrockStoker wrote: »

I don't think that this is the time though. If you keep taking profits every time a little part of your investment goes up 18%, then dealing fees will soon add up, and your profits will take a significant hit, especially if it's only a small portfolio to begin with.

Trading costs not really a significant concern: trading cost on iWeb £10 (2 x £5), stamp duty £55 (none on IPO but will be on re-purchase), 18% profit made = £2k.

Prism

RomfordNavy wrote: »

Trading costs not really a significant concern: trading cost on iWeb £10 (2 x £5), stamp duty £55 (none on IPO but will be on re-purchase), 18% profit made = £2k.

The real question is what will you then do with that £2k? You need to find an investment that you believe will perform as well as or better than Smithson will do.

I only sell investments to do rebalancing, however it pretty much always leaves me with a worse performance than had I just let things alone.

Thrugelmir

schiff wrote: »

I remember a saying in the old penny shares days: 'Sell half on a double'. You bought at 2.5p and sold half at 5p. Though I've come to regard Terry Smith and his team with something approaching worship, I doubt that that will happen, however long.......

Difference is that you are holding a basket of investments not a single share. The fund manager should be the one who is going to decide whether now is the time to "cash in" and reinvest the proceeds elsewhere.

“If you aren't thinking about owning a stock for 10 years, don't even think about owning it for 10 minutes" - Warren Buffett.

aroominyork

Picking up this Smithson thread again (and Thrugelmir's post #16) , it will be interesting to see how much dealing the fund does. With Fundsmith and Lindsell Train a new purchase is a major event which commands column inches: "Smith buys Facebook", "Train buys Man Utd". With SMEs you are not buying into such established success stories; new ideas will come among more often; and some holdings' expansion plans will not work out. So I just wonder whether Smith's buy and hold philosophy will prevent Smithson being quite as responsive and nimble as it could be.