Having To Sell Investments For Cash 1 November 2022 at 10:38AM in Savings & investments 11 replies 532 views

GSP

Would you choose to sell one that had fallen 2% over the last year, or one that was down 25%?

Thanks

frugalmacdugal

Hi,

down over this last year, but which one more in profit since purchase?

dunstonh

I wouldn't take any notice of what has gone before.  I would be thinking about what is coming.

Linton

I plan to sell to raise cash only as part of an annual review/rebalance of overall assert allocations with cash being taken from reserves at other times. Past performance is not a criterion. If no other factors have changed that would imply selling the best performer over the previous year. But other factors always change.

phillw

dunstonh said:

I wouldn't take any notice of what has gone before.  I would be thinking about what is coming.

How do you know what is coming?

JohnWinder

A thought through portfolio would hold this much of this asset and that much of that asset. If the portfolio is out of kilter because of value changes, wouldn’t it make sense to correct, even partially, the imbalance?

Frequentlyhere

phillw said:

dunstonh said:

I wouldn't take any notice of what has gone before.  I would be thinking about what is coming.

How do you know what is coming?

We don't know anything for sure about the future, but some things are far more likely than others.

1) If that 25% down investment is a Govt bond fund then yields will have gone up and an improvement in performance is highly likely.

2) If it's a Sterling-hedged global equity fund then it's more likely than not to recover and do ok within the next 5 years or so.

3) If it's all in ElonBabyMuskcoin then we still know that a 25% drop could presage a further 99% drop or indeed boom, as it's the nature of the investment.

NedS

phillw said:

dunstonh said:

I wouldn't take any notice of what has gone before.  I would be thinking about what is coming.

How do you know what is coming?

You don't, but you may have a view of what may perform better / worse.

If you have no view, then it's easy as you would just rebalance to your target allocations, releasing the amount of cash required.

GSP

Thanks for the replies so far.

Or, if you were having an annual review with a lot of changes to investments.
After last years falls, would you still set aside an amount in cash?
Or, have no cash set aside and sell investments as you go along for cash.

As I type, seems turning into cash now is the right approach.

NedS

GSP said:

Thanks for the replies so far.

Or, if you were having an annual review with a lot of changes to investments.
After last years falls, would you still set aside an amount in cash?
Or, have no cash set aside and sell investments as you go along for cash.

As I type, seems turning into cash now is the right approach.

Presumably you had a plan when you entered drawdown? What does your plan say to do in these circumstances?

adindas

GSP said:

Would you choose to sell one that had fallen 2% over the last year, or one that was down 25%?

Thanks

Neither, If it was me, especially before I get more information why they fall. Also if I already did DDs before buying them. Keep in mind S&P500 has fallen more than 20% from its ATH, NASDAQ is even 30%. So the paper loss of 20% is not uncommon in the bear market. What is the chance they are likely to come back to ATH ?

I personally do not believe in balance portfolio, let alone the reason for selling investment which have fallen 20%+ is purely for the sake of balancing. Proven investors, do not do balancing, but they pick the winners.