Selling - Is there a right time to sell?

[Jared Seah]

If my position has doubled, by selling 50% I would have recovered my capital.

1) Great for sleeping in the night as if market goes up, I still have skin in the game. If market corrects, it's "just" less profit. To lose my unrealised profit, the stock has to go to zero

2) When opportunity appears, no dry powder, no chips - cannot play (Psst! You interested in a margin account?)

3) For big ego alpha male peacocking, the % return on a position with no money down is infinity returns right? (I hope I got my math right) Hey! You beat those with 10 baggers liao! Or-yi-or! Tarzan no wear pants! You win liao lor! (Benchmarking gone wild!)


Jokes aside, I buy because I speculate I can make money selling at a higher price sometime in the future.

I sell because I speculate (ok, more in fear) that my paper profits may vanish if I wait too long or too greedy.

The problem is I often get it wrong...


P.S. You need to get a 2 bagger FIRST

[paullow]

hi all,

i view from another perspective. ie from the mere fact that i own shares in the company, i own part of the company. we don't see many founders of good companies paring their stakes even during gfc when their net worth may become half or even less of their original. we don't see wee cho yaw, kwek leng beng, peter lim etc selling their stakes during the 2009 when sti 1600points

so when i buy into a company, i buy deeply and hold as if i were a large shareholder. if large shareholder don't panic and sell off during sti 100 point drops, i can follow suit.

of course, entry price and point is utmost impt. if stock is trading a discount to unrealised value and even offer good dividends, that's time to go in.

imho

[KopiKat]

For Long Term stocks, I sell when the original reason for buying and holding the particular stock is no longer true. For eg.

1) Yield Stocks - Yield has dropped below my target threshold either due to Price increase or reduction in dividend payout
2) Growth Stocks - It'd either stopped growing or I was wrong
3) Biz Change - Either thro' diversification, RTO, ...

Another reason for me to sell is when I have limited free cash and I see a better opportunity. In that case, I'd sell one stock to switch to the other stock.

The only resemblance to a 'take-back-cost-by-selling-some+div' kind of accounting recognition is for my Short Term Trades. In such a case, I'd treat my cost as Buy - Dividend collected to compute my breakeven Sell Price. I don't usually buy a stock for short term trading but I may suddenly decide to sell it cos' of the above longer term sell reasons. Hey! I'm wrong often and the best thing to do is.. SELL!

For the long term stocks, dividends collected or even profits from partial selling is never part of my accounting recognition to reduce the cost recognition of balance holdings. Every year, I compute my portfolio P/L including dividends and every new year, I start from a clean sheet ie. past realised profits + div is considered... PAST!

[pubster]

Currently I'm reading the book "reminiscences of a stock operator". 1/3 through the book

2 things that caught my attention.
1) The money is in the big swing (Do not sell too early. Hold on to your position in the uptrend. Thats where the big money is.)
2)If you are right, pyramid up to boost the gain. If wrong, cut straight away to minimise loss.

Selling half when your stock double make it seems that you are still not sure if you are right. Yes, one will find some comfort if the stock goes down. But one will also feel the agony of missing out on profit if it continue to climb.

But different people have different mindset/methods and no one way is best for everyone. In the end, nobody can agree which method is the best. Just do what is comfortable to you(Hopefully it is also profitable).

Purely my worthless amatuerish thoughts...

[corydorus]

We should know oneself ability.

I am not an expert in reading financial statement, reading broad market or making good value investment reading. Neither am i a good trader. So chances are my conclusion has higher percentage of wrongs compared to Guru.

Therefore if my stock fly high, i will start selling in stages to overcome my weaknesses.

Wholesale copying "blindly" of other people successful strategy can be quite detrimental if we do not know ourselves.


Cory

[Some-one]

I sell when I realised that the fundamentals of the company is deteriorating or that the returns that I get from the stock is not up to my expectation. I recently just sold CitiGroup, not because its fundamentals are deteriorating. I am a long term investor but because of the custodian fee that Vickers is charging every month starting from June this year. Normally when I realised that the fundamentals are weakening, I would wait for the AGM and interrogate the management before coming to a final decision.

[hongonn]

I sell when the company start to irritate me and i really don't like it anymore. If i dump i will just dump all, and dump fast fast. Leaving part of it in portfolio is only becoming eye sore to me. It does not feel good when you open up your portfolio

[CityFarmer]

I sell when over-value by projected valuation, and/or a better option(s) to put the divested money.

Depend on the stock(s), if it belong to "anchor" group in my portfolio, i will divest most but keep a minimum holding. If it belong to "non-anchor" group, i will divest all.

[smallcaps]

It might exist (right time to sell) but I personally have not learnt how to do it after investing in penny stocks for more a decade...

Just my opinion, that maybe it's more important to know when NOT to sell, assuming much effort was put into selecting the company for investment in the first place.

[smallcaps]

Here's a recent example regarding Valuetronics:

1) Directors sold off 26 mil shares in March at 24 cents.

2) Q1 results ended 30 Jun reveals termination of licensing business due to losses.

3) Target price gets downgraded by KH from 31 cents to 16 cents.