Profit Taking - Sell Up or Sell down

[funman168]

Hi all,
which selling method you guys adopt of you find a counter you hold is overvalue:

1) Sell on the way up
2) Sell on the way down
3) Sell all at once regardless of price movement.

Thanks

[safetyfirst]

1) Sell on the way up

i tend to do this with the reminder/mindset that the chance to sell at the TOP is as good as striking 4D, which is almost never so i wont even bother to try

[smallcaps]

I prefer to sell all if can.

[NTL]

I will just sell all, and maybe leave 1 lot just for fun.

[funman168]

1) Sell up - reverse pyramid way
2) Sell down - pyramid way

what do u guys think

[Temperament]

For me, it all depends on the number of lots you are going to sell. And also the current market. Is it a trending up market? If it is a trending up market you may regret selling all in one shot. If you ask me now, do i regret selling all my SPH @ average price of $4.10 (even selling "slowly"), i will say yes on hindsight. But if Black Swan suddenly appears tomorrow, i will say, "Heng AH!" That's human behaviour or human psychology. Nobody can escape. So as long as you make money, don't look back. Look forward and prepare for another round of battle in the market. Who can judge market's sentiment correctly? i don't think anyone can.

[felixleong]

1) Sell on the way up

50% above fair value, I sell about half
100% above fair value, sell balance half and happy with the profits liao ^^

If not just hold and collect dividends also happy ^^

[snowcap]

Hi all,
which selling method you guys adopt of you find a counter you hold is overvalue:

1) Sell on the way up
2) Sell on the way down
3) Sell all at once regardless of price movement.

Thanks

This is a very personal decision. For example, let's take a Toyota Corolla Altis. Would you buy it at $80k, $100k, or $120k?

Some people may say I don't even need a car cuz I take bus. Some people will say $120k is reasonable because that is market rate. Some may say $120k is market rate, but my income is only $3k a month, so while I need a car, I can't afford that much for a depreciating asset. And of course, others will say, I'd rather buy a Merc for $250k.

So for your question, it depends on each individual investment profile.
- Some with only 1 stock in their portfolio may decide to take profit (bird in the hand is better than 2 in the bush)
- Some may be "greedy" and hold on
- Some may sell half to hedge
- Some may sell all and move funds to more undervalued stocks
- Got many other strategies...

Since this is a value forum, I think most will agree that once overvalued, it is time to sell, so the question is how much to sell and at what level of overvalued-ness?

- One school of thought is "if the business is good, my holding period is forever" - after all, if you sell, you may not be certain when you can buy back into this wonderful business. It may come down only 5 years later, within which you may have missed the great dividends, or its value may grow into the previously overvalued price. So I hold on and NEVER sell as long as the business is intact
- Another school of thought is "sell when it reaches x multiple of fair value" (Like felix, sometimes I do this)
- Another tactic I use (tactic not strategy) is if I understand the price pattern and volatility of the counter, I even trade on spikes and plunges. I look at the moving average (MA), and if there is a 20-30% rise above the MA for no fundamental reason, I sell. Usually it drops back to the MA and I buy back in. Conversely, if a sound stock plunges for no fundamental reason, I will accumulate more.

I use a lot of discretion, and no fixed rules.

[Temperament]

Common Sense works 99% of the time. No fixed formula. Yes or no?

[funman168]

Thanks all for,your advise, it is indeed very difficult to sell...haha