Beginner exit strategy on stocks?

Bostonerimus1

EasyToAssemble01 said:

Bostonerimus1 said:

Before I was retired I would buy or sell whenever my asset allocation deviated by more than +/-5% from 60% stocks and 40% bonds; so I was just rebalancing across very broad index funds. I discovered early on that beyond that I had no idea and so I'm a long term investor. I've held some of the same funds for over 30 years and never plan to sell. OP you are thinking short term and that is when you can get into trouble. I don't have any advice that specifically addresses your question, but I would advise you to change the way you approach investing and bring your eyes up from looking at your feet to looking at the horizon.

I’m mainly invested long-term in ETFs (85% of my portfolio I’d say), but was interested in value stocks, as a short-term opportunity.

Why? Don't get sucked into "opportunities", rather seek to improve your finances over the long term through thrift and a consistent strategy. Don't chase after return, you are likely to be disappointed.

EasyToAssemble01

Hoenir said: For a good read on individual stock selection I can highly recommend 

The Smart Money Method: How to pick stocks like a hedge fund pro by Stephen Clapham. 

Great, thanks for the recommend. I'll look into that.

Prism

When many stocks produce returns in muliples of 100% why would you want to exit after 20%?

wmb194

Prism said:

When many stocks produce returns in muliples of 100% why would you want to exit after 20%?

A great many don't though.

Section62

wmb194 said:

Prism said:

When many stocks produce returns in muliples of 100% why would you want to exit after 20%?

A great many don't though.

Yes, I read the 15-20% thing with considerable relief, knowing I could now continue to benefit from regular income from my BT shares (and quite possibly continue to do so for the rest of my lifetime), as just breaking even on the share price looks a very long way off.

jimi_man

Prism said:

When many stocks produce returns in muliples of 100% why would you want to exit after 20%?

Indeed. I’ve got a few thousand Rolls Royce shares which I’ve had for a couple of years or so. At last looking they were up over 400% however I’ve no desire to get rid of them. I bought them for the long term. 

I bought them on a whim and apart from some other shares that were given to me I don’t have any others, having only index funds. I’m unlikely to buy any more, too much hassle. 

However I don’t see the problem with someone building up a portfolio of shares with appropriate diversification. But selling them at plus 20% does seem a little low. 

aroominyork

Eyeful said:

4. You are supposed to learn share fundamentals, before investing not after.

Have you ever heard that in life you can only learn a certain amount from theory - the rest you learn from experience.

Hoenir

wmb194 said:

Prism said:

When many stocks produce returns in muliples of 100% why would you want to exit after 20%?

A great many don't though.

"Research by Hendrik Bessembinder, professor and Francis J. and Mary B. Labriola Endowed Chair in Competitive Business at ASU’s W. P. Carey School of Business, evaluated lifetime returns to every U.S. common stock traded on the New York and American stock exchanges and the Nasdaq since 1926.

Key findings

“The results also help to explain why active strategies, which tend to be poorly diversified, most often underperform,” says Bessembinder, who found that the largest returns come from very few stocks overall — just 86 stocks have accounted for $16 trillion in wealth creation, half of the stock market total, over the past 90 years. All of the wealth creation can be attributed to the thousand top-performing stocks, while the remaining 96 percent of stocks collectively matched one-month T-bills."

tigerspill

I have found decumulation MUCH more difficult than accumulation.
I found "Living off your Money" by Michael McClung really good.  It is not an easy read and will take a couple of runs through to get the basics.  While I don't follow the specifics in the book, the understanding I gained allowed me a much better understanding of the important aspects and to adopt a strategy that I am OK with.

wmb194

jimi_man said:

Prism said:

When many stocks produce returns in muliples of 100% why would you want to exit after 20%?

Indeed. I’ve got a few thousand Rolls Royce shares which I’ve had for a couple of years or so. At last looking they were up over 400% however I’ve no desire to get rid of them. I bought them for the long term. 

I bought them on a whim and apart from some other shares that were given to me I don’t have any others, having only index funds. I’m unlikely to buy any more, too much hassle. 

However I don’t see the problem with someone building up a portfolio of shares with appropriate diversification. But selling them at plus 20% does seem a little low. 

The problem is you can do brilliantly for a while and then begin to think that 20% over, say, a year is a meagre return.