When is the right time to sell?

Jivin Turkey

All this talk regarding the risk of buying BOI shares (may go up, may go down even more) got me thinking. How do people here who invest decide when is the time to sell their assets?

Take BOI shares for example, back in 2005 they hovered around the €13-14 mark before spiking again to €18 at the end of 2006/early 2007. For people who did, at what stage did you think "this is enough for me, I'm going to get out"? At the time, people who sold their shares at €13 would be kicking themselves the following year, same goes for people who didn't sell at €18.

I suppose the moral of the story is that people are never happy when they see a potential buck lost.

If you had BOI shares now, would you hold them or sell them? The price is currently just brutal, but analysts think there could be more bad news on the way as they continue to hold their non-performing loans. Would it be worth selling the shares at such prices or taking the gamble that they'd at least increase somewhat in the medium term. As little as a €0.45 increase is now 10% more in your pocket!

Same goes for housing. Out of people here who made a buck in the market, at what point did you manage to say enough is enough? The temptation to squeeze that little bit more was always there.

I don't claim to be a big investor myself. I own a property which I'm renting for the moment (4.8% yield on my borrowing which I'm more than happy with), and a few shares which are under performing but I've been holding, probably for too long, because I think takeover talk may be on the horizon which should see a rebound somewhat (I hope!). My property is a good property in a solid location so it hasn't really felt the pinch of price falls, but not that I'm interested in selling anyway as I plan to move into it. My rationale in buying in the first place was that if I was happy to live in it the market price of it is far less important to me as I'd be extracting value out of it by living there, and I could afford it without stretching myself to the limit!

When it comes down to it, I suppose it all depends on the risk/return ratio that people are prepared to accept. But judging by things I've heard here as well as in the office or pub, some people really don't weigh up the actualities of investing sums, be they €100 or €100,000. I've actually heard the following "strategies" from friends/acquaintances:

- If I make 20% in the first year I'm out.
- Hold for three years and see where I'm at, if it falls by 5% I'll pull out only slightly burned.

It's like picking a horse because you like the name.

"3:45 - Wolverhampton - Number 4 - She's the fastest"

Onikage

I find the right time to sell is when you need the money for something else. A better investment, home, business, whatever. No point hanging on to stock for the sake of wanting to see it eventually rise a few more points.

Couldn't agree more on the property front.

Diarmuid

When you need/want the money. (assuming you bought a well diversified portfolio in the first case)

Jivin Turkey

Hmmmm...this is kind of what I was getting at.

Surely holding on to investments of a speculative nature "until you need the money" is extremely dangerous. Investing is not about putting something away "until you need it", it's speculating to accumulate.

I think too many people think that their money is safe invested in something like BOI shares, when evidently, that is completely false! This is the notion I'm trying to get at, too many people invest in something thinking they'll make a packet, or if not they can just get their money back.

Nobody seems to have any sort of exit strategy.

A Random Walk

Jivin Turkey wrote: »

This is the notion I'm trying to get at, too many people invest in something thinking they'll make a packet, or if not they can just get their money back.

Nobody seems to have any sort of exit strategy.

Never is a good time to sell. Long term buy and holders also sometimes "rebalance" (google is your friend).

Onikage

I don't believe anyone thinks their money is safe on the stock market. Well, not anymore.

It's not dangerous because any money invested in stocks should be considered disposable. Any money you get back should be considered a bonus. Rather than trying to formulate a bulletproof exit strategy, anyone thinking about investing should ask themselves "can I afford to lose this money?" Once you're sure of that, you can make better buying and selling decisions because the risk of losing the house/car/family is no longer affecting your judgement.

cregser

I've been taking a long long look at investments before taking any kind of plunge. I read Mark Shipmans book "The Next Big Investment Boom" and he talks about rules that he's come up with that tend to be right more times than wrong. They're not perfect, but if he can trust the rules over his gut feeling then he'll be ok in the long term. I forget the details, but they basically involved looking at long term weekly averages of the stock price and if there was a large drop he'd have to decide if it was a "shake out" or something serious.

Another less technical rule he had was to look out for every man and his dog investing in a particular stock. He sold all his rental properties when his postman talked about buying in. A good while later the market collapsed and he didn't look like a fool any more. He also gave a historical example in Holland of a booming tulip market that collapsed when everyone bought in.

I was hoping his book would be more of a how-to guide to become a millionaire like he did, but there doesn't seem to be such a thing. He says there are times when he doubts himself, but when he perseveres (following his rule set), he usually eventually suceeds over time. I think he also mentioned having to refine his rules over time when market conditions change. So no certainties there...

BendiBus

A Random Walk wrote: »

Never is a good time to sell.

Never? Then what's the point? Just having a big paper profit to salivate over? Or are you talking about investing until retirement then living off dividends? Just need a little clarification on your statement I think your statement may be more mantra than logic.

If my reason for investing is to make enough money to buy a big yacht, then the time to sell is when I have enough money to buy a big yacht. Wouldn't you agree?

pjproby

i think mark shipman argued that you should never buy or hold a stock that falls below its 200 day moving average. It is easy to get these averages, particularly
for uk and american stocks, from yahoo finance. Shipman's book was written before the current stock market collapse and I wonder how he is faring right now. I suspect many investors would recommend selling if your stock is in profit
at the moment. With the current wild fluctuations you could probably buy the same stock cheaper soon.