Profit on buy and hold

Mark2016

Hi everyone

I like to invest in good dividend paying shares for income. My strategy is to buy on dips thus increasing my holding. Recently I invested in Anglo Pacific but to my surprise my investment has increased over 20 percent. The current price is way above its 200 day moving average and I m currently in a very good potential profit. As I invested in Anglo Pacific for dividend income. I’m wondering if I should try and capture the increase I have incurred. I still want to invest in Anglo Pacific. Just wondering what typically buy and hold investors do when one of their holdings increases dramatically. Do they employ a stop loss and keep raising it in tandem with the increasing share price. When it is triggered, they capture the profit. Do they typically sell and then invest again at the then lower price. If I were to sell my current holding should a stop loss be triggered, then invest again, is this a typical strategy people employ? Or would it be better to sell the monetary amount which I have made in profit less charges? Would appreciate suggestions/advice. Many thanksProfit on buy and holdProfit on buy and hold

LobsterMemory

I tend to just carry on holding

Linton

The standard way of dealing with varying prices between investments is to rebalance to keep % allocations constant. You should only do this occasionally, say once a year, and only when the variation is significant. Otherwise you will find you are making large numbers of trades on market noise. If you are still paying into the portfolio you can rebalance by buying more of the poorly performing investments.

phillw

Mark2016 wrote: »

I like to invest in good dividend paying shares for income. My strategy is to buy on dips thus increasing my holding. Recently I invested in Anglo Pacific but to my surprise my investment has increased over 20 percent. The current price is way above its 200 day moving average and I m currently in a very good potential profit.

Don't people buy into shares before the dividend and then cash them out afterwards? It will come down to whether you can make more on the sale than the trade is costing you in fees and lost dividend.

LobsterMemory

If that actually is a strategy, then it's just one of many

And not really in keeping with Buy 'n' Hold

LHW99

I use a stop loss for holdings that I feel may be coming to the end of a run, if I don't want to particularly continue holding all / as much. Otherwise, I take some profits (to invest in another holding) and let the rest of the units / shares carry on.

bowlhead99

For what it's worth, I put my reply to this on the thread you had initially created in the ISAs sub-board earlier: https://forums.moneysavingexpert.com/discussion/comment/75719322#Comment_75719322

I agree with Linton's comments.

phillw wrote: »

Don't people buy into shares before the dividend and then cash them out afterwards?

Not usually, unless they deliberately want to boost their income while creating a capital loss (or smaller gain). And as you say, doing it for short term periods is going to cost on the fees (and stamp duty, and bid-offer spread) so changing the nature of the profits for tax purposes may not be cost-effective.

The OP doesn't seem to be looking to artificially boost dividends at the expense of gains, just wondering what to do when he has a surprising amount of money tied up in one company due to unexpected and potentially short term price improvements. Company valuation changes don't usually happen in smooth straight lines so an increase one period may be more than offset by a decrease the next. If you want to avoid being caught out by valuation drops, it makes sense to dispose of part of your holding when it gets 'too large'.

Mark2016

I like this particular company and normally I would top up my holding when there is a dip in price. I plan to do this with Anglo Pacific. It's the surprising increase above its 200 moving day average which I would like to capture some of.

Mark2016

Thanks everyone for your input