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  • FIRST POST
    • gif1
    • By gif1 15th May 18, 8:50 PM
    • 34Posts
    • 6Thanks
    gif1
    How do you consolidate your gains?
    • #1
    • 15th May 18, 8:50 PM
    How do you consolidate your gains? 15th May 18 at 8:50 PM
    Hi,
    Assuming that timing the market (sell high, buy low) is near to impossible, is portfolio rebalancing the only and/or best way to consolidate your (paper) gains when your holdings have been performing well and you would also want to protect yourself from the next downturn?
    Are there other options?
    If you rebalance, how frequently do you do that? I guess doing it too often might curb your gains?
    And, for this reason, do you always hold some cash in your portfolio as a risk free (safe) asset, or fixed income might suffice?
    Thank you for your answers.
Page 1
    • bostonerimus
    • By bostonerimus 15th May 18, 9:01 PM
    • 2,028 Posts
    • 1,345 Thanks
    bostonerimus
    • #2
    • 15th May 18, 9:01 PM
    • #2
    • 15th May 18, 9:01 PM
    When I was saving for retirement my assets were divided roughly 60/40 between equities/ bonds and cash. I rebalanced when either allocation was off by +/-5%. I only used a few broad trackers so I had little rebalancing to do withing asset classes.

    I think rebalancing is a good thing for people to do even if it only serves the function of keeping them involved and as a psychological crutch through the ups and downs. So either do nothing or rebalance according to some predetermined criteria. Buying and selling emotionally will probably produce very bad outcomes.........FYI there is another strategy that is sort of the opposite of rebalancing by selling good performers and buying the poorer performing assets, it's called momentum investing and you buy more of the good performers when they are doing well.
    Misanthrope in search of similar for mutual loathing
    • mark13
    • By mark13 15th May 18, 9:04 PM
    • 289 Posts
    • 131 Thanks
    mark13
    • #3
    • 15th May 18, 9:04 PM
    • #3
    • 15th May 18, 9:04 PM
    I have 10% in cash. I review approx. every 3 months and rebalance. sell / swap the underperformers , either moving to cash or topping up winners . Try to keep the spread over 10 stocks/funds/trusts + cash and add research new opportunities and add to watch list. If all are performing I leave alone.
    Win Dec 2009 - In the Night Garden DVD : Nov 2010 - Paultons Park Tickets :
    • Thrugelmir
    • By Thrugelmir 15th May 18, 10:29 PM
    • 59,247 Posts
    • 52,619 Thanks
    Thrugelmir
    • #4
    • 15th May 18, 10:29 PM
    • #4
    • 15th May 18, 10:29 PM
    Rebalance by reinvesting income. Only buy what you intend to hold forever.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • DiggerUK
    • By DiggerUK 15th May 18, 11:12 PM
    • 3,013 Posts
    • 2,948 Thanks
    DiggerUK
    • #5
    • 15th May 18, 11:12 PM
    Well, what did you expect I would say
    • #5
    • 15th May 18, 11:12 PM
    Rebalancing can only ever give you the chance to maintain or increase your earnings, so long as you move the right way. Unlike an interest paying cash account that clearly shows what will happen if you transfer, equities can leave you with a nasty rash.

    Let us assume you have made all the right moves, and you do not want to see your gains evaporate....what then. This I believe is what you are asking. For Digger Mansions it was gold, and it was the right move.
    You could choose from a whole basket of hard assets......land, property, precious gems, property, classic cars, wine, antiques, etc., etc., etc.

    So, when do you move, that is a judgement call which only you can make. Then comes the next question, were do you consolidate. We chose gold because it is the easiest hard asset to liquidate, with a long track record of holding value..._
    I am not now, nor have I ever been, a Financial Adviser.
    'Forward to the British Spring' 'Viva Wikileaks'
    • Prism
    • By Prism 16th May 18, 12:02 AM
    • 403 Posts
    • 315 Thanks
    Prism
    • #6
    • 16th May 18, 12:02 AM
    • #6
    • 16th May 18, 12:02 AM
    This I believe is what you are asking. For Digger Mansions it was gold, and it was the right move.
    Originally posted by DiggerUK
    When (and why) did you move to gold? I ask because over the last 5 years it has dropped in value and over the last 10 its not increased by much. I have never thought it much use as an investment
    • sixpence.
    • By sixpence. 16th May 18, 12:27 AM
    • 138 Posts
    • 31 Thanks
    sixpence.
    • #7
    • 16th May 18, 12:27 AM
    • #7
    • 16th May 18, 12:27 AM
    Rebalance by reinvesting income. Only buy what you intend to hold forever.
    Originally posted by Thrugelmir
    What is the point of holding something forever? You can't take it with you when you die.
    • Keep pedalling
    • By Keep pedalling 16th May 18, 1:16 AM
    • 5,204 Posts
    • 5,811 Thanks
    Keep pedalling
    • #8
    • 16th May 18, 1:16 AM
    • #8
    • 16th May 18, 1:16 AM
    What is the point of holding something forever? You can't take it with you when you die.
    Originally posted by sixpence.
    Could not agree more, at some point the aim should be to stop saving, and start spending. We are at that point and rebalancing is done annually, and combines with shifting GIA assets to ISAs, maximising out CG allowances and stripping out enough cash to supplement our pensions to do the things we want and to reduce IHT liability through gifting.
    • aroominyork
    • By aroominyork 16th May 18, 6:16 AM
    • 514 Posts
    • 167 Thanks
    aroominyork
    • #9
    • 16th May 18, 6:16 AM
    • #9
    • 16th May 18, 6:16 AM
    I review approx. every 3 months and rebalance. sell / swap the underperformers , either moving to cash or topping up winners.
    Originally posted by mark13
    So you sell low and buy high?
    • mgarl10024
    • By mgarl10024 16th May 18, 9:12 AM
    • 618 Posts
    • 438 Thanks
    mgarl10024
    What is the point of holding something forever? You can't take it with you when you die.
    Originally posted by sixpence.
    Could not agree more, at some point the aim should be to stop saving, and start spending.
    Originally posted by Keep pedalling
    This probably works well if you can time your spending/depletion of savings/investments (and the income they provide) to your exact moment of death.

    I feel though that Thrugelmir was instead referring to the difference between 'value' investing - buying something which will provide income over the long-term and so you are happy to hold forever, than 'trading' or even 'speculation' where you buy something and only intend to hold it for the short-term and are hoping for a rise in price.
    • AnotherJoe
    • By AnotherJoe 16th May 18, 9:20 AM
    • 9,853 Posts
    • 11,018 Thanks
    AnotherJoe
    I have 10% in cash. I review approx. every 3 months and rebalance. sell / swap the underperformers , either moving to cash or topping up winners . Try to keep the spread over 10 stocks/funds/trusts + cash and add research new opportunities and add to watch list. If all are performing I leave alone.
    Originally posted by mark13
    Every three months??? So you are dealing on noise.
    • jamei305
    • By jamei305 16th May 18, 9:25 AM
    • 347 Posts
    • 401 Thanks
    jamei305
    So you sell low and buy high?
    Originally posted by aroominyork

    As opposed to reallocating money from well-managed funds into badly managed ones?
    • Glen Clark
    • By Glen Clark 16th May 18, 9:28 AM
    • 4,181 Posts
    • 3,184 Thanks
    Glen Clark
    Hi,
    hold some cash in your portfolio as a risk free (safe) asset.
    Originally posted by gif1
    Why do people think sterling cash is risk free?
    Compared to, say,a tracker of 2000 of the world's biggest companies?
    It is difficult to get a man to understand something, when his salary depends on his not understanding it. --Upton Sinclair
    • DiggerUK
    • By DiggerUK 16th May 18, 10:12 AM
    • 3,013 Posts
    • 2,948 Thanks
    DiggerUK
    When (and why) did you move to gold? I ask because over the last 5 years it has dropped in value and over the last 10 its not increased by much. I have never thought it much use as an investment
    Originally posted by Prism
    Biggest part was bought between 2005 and 2015. My average is shy of 650 an ounce.
    Were are you getting your data? Over 5 years it is much of a sameness, and over 10 years it has more than doubled..._

    https://goldprice.org (Scroll down for historical prices back to 73)
    I am not now, nor have I ever been, a Financial Adviser.
    'Forward to the British Spring' 'Viva Wikileaks'
    • C_Mababejive
    • By C_Mababejive 16th May 18, 10:40 AM
    • 10,496 Posts
    • 9,440 Thanks
    C_Mababejive
    Rebalance by reinvesting income. Only buy what you intend to hold forever.
    Originally posted by Thrugelmir

    You see this is the dilemma i have and it is probably due to a lack of understanding.

    People say time in the market, not timing the market.

    Surely though if you have bought a particular share and the price has gone up dramatically, you look at the historical share price and you realise its at a 5 or 10 year high, surely it is time to sell and crystallize the gain even if its paying a yield of 3/4/5/6% ?

    If you don't then surely its a missed opportunity?

    The price could drop back a fair bit.

    Of course there is also the question of what to buy with the loot,,but then you might decide to invest it in a collective investment for diversification.

    I have these issues at the moment.. Looking at SMT,why would i buy it now? And yet people are buying it?
    Feudal Britain needs land reform. 70% of the land is "owned" by 1 % of the population and at least 50% is unregistered (inherited by landed gentry). Thats why your slave box costs so much..
    • aroominyork
    • By aroominyork 16th May 18, 11:10 AM
    • 514 Posts
    • 167 Thanks
    aroominyork
    As opposed to reallocating money from well-managed funds into badly managed ones?
    Originally posted by jamei305
    If a fund lags the market or its peers for a couple of months are you going to decide that makes it a bad fund? One month ago I bought Axa Framlington Japan. In the month since then Lindsell Train Japan has risen by 2% more. Does that mean my decision was wrong - no! - or that Axa is a poorly managed fund - no! - or that I should sell it and buy Lindsell Train - no!
    • StellaN
    • By StellaN 16th May 18, 11:35 AM
    • 220 Posts
    • 76 Thanks
    StellaN
    If a fund lags the market or its peers for a couple of months are you going to decide that makes it a bad fund? One month ago I bought Axa Framlington Japan. In the month since then Lindsell Train Japan has risen by 2% more. Does that mean my decision was wrong - no! - or that Axa is a poorly managed fund - no! - or that I should sell it and buy Lindsell Train - no!
    Originally posted by aroominyork
    I think the implication was for consistently under performing funds over a period of time not the difference between 2% in one sector/region over a few months. As an example, at the moment I'm considering my holding in Fidelity Asian Values in my ISA account and whether I should switch to Invesco Asia Trust or Schroder Asia Pacific Trust. Its done well long term but I'm just not sure about whether its the right investment for me in that region in the future.
    • Prism
    • By Prism 16th May 18, 11:40 AM
    • 403 Posts
    • 315 Thanks
    Prism
    Biggest part was bought between 2005 and 2015. My average is shy of 650 an ounce.
    Were are you getting your data? Over 5 years it is much of a sameness, and over 10 years it has more than doubled..._

    https://goldprice.org (Scroll down for historical prices back to 73)
    Originally posted by DiggerUK
    Ahah, I was using that site but forgot to turn it from dollars to pounds on the chart. I guess that does tell us that to some extent the benefit of gold only comes through while the dollar is strong.

    Saying that, I am glad that I didn't do the same. I'm sure it was the right decision for you but I still need to make better gains than that for the coming years so I still need to be in equities for the long haul, crash or no crash.
    • Prism
    • By Prism 16th May 18, 12:02 PM
    • 403 Posts
    • 315 Thanks
    Prism
    You see this is the dilemma i have and it is probably due to a lack of understanding.

    People say time in the market, not timing the market.

    Surely though if you have bought a particular share and the price has gone up dramatically, you look at the historical share price and you realise its at a 5 or 10 year high, surely it is time to sell and crystallize the gain even if its paying a yield of 3/4/5/6% ?
    Originally posted by C_Mababejive
    Growth companies are at historical highs pretty much all of the time. How do you know when the top is. Then, should you decide to sell and look for another company to buy how can you tell if that one will grow at a greater rate. Its difficult to judge. I leave up up to the fund managers...

    I have these issues at the moment.. Looking at SMT,why would i buy it now? And yet people are buying it?
    ...so if we trust the fund manager we have to assume that they have a better idea of the high point of a growth company and when its best to decrease exposure to it and move on. If you take SMT as an example i think we can safely say that they assume that Amazon, Tencent, Alibaba and Tencent are nowhere close to being finished as high growth companies. To invest in SMT you would have to agree
    • ColdIron
    • By ColdIron 16th May 18, 12:21 PM
    • 4,337 Posts
    • 5,504 Thanks
    ColdIron
    surely it is time to sell and crystallize the gain even if its paying a yield of 3/4/5/6% ?
    Originally posted by C_Mababejive
    Don't confuse yield (the proportion of the share price paid as dividends) with growth (increase in share price) or total return (the product of both). Many companies, or investment companies, with good share price growth pay little or no dividend
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