A question was asked of me about "when do I sell"….
That's a swirling bowl of confusion and never can be answered because it all "depends". It depends on whether or not you think the fundamentals of the company have changed - and not to your liking. Therefore - you're no longer CONFIDENT in owning the shares. That would be a sell signal for me.
If you own INTEREST RATE SENSITIVE shares - such as JNK - HYG - NLY…. and you think or see interest rates are going UP -- then that would be a sell signal for those shares that would be taken to the woodshed in that environment.
I don't do --- "I'm down 5% so I should sell". I don't do "the market is down so I'm going to sell everything and get out". I would do that if I thought the world was going to hell in a hand basket… but I don't think that way. To me - that would be akin to saying -- Oh! The Democrats have control of congress so the USofA is down the tubes… or vice versa. The USofA has withstood the test of time.. and will do "fine" over time regardless of who or who isn't running things.
Ditto with the market…. I've just put up charts that show real numbers over long periods of time - to PROVE that over time your investments are going to do just fine.
If you buy weird stuff - and if you don't know what you're doing and just randomly take someones advice to buy such and such because of blah blah blah --- then you'll take what they give you - because you don't know why you own it - and you won't really be connected to the stock in any way other than you bought it. I've never preached that. Conversely what I've said would help you make a buying decision is to buy companies you're familiar with - where you shop - or in an industry you're involved with etc.
Then I've always said to do the chart comparison after you've thought about your choice --- look at the top 3 or 4 names in the same industry and compare their TOTAL RETURN charts -- and their dividends etc. You can pick the loser in the top 5!! If you don't look and do a bit of research. Choosing SEARS just because it's a name you know - will probably not do your portfolio any good. Now -- if you want to bet that they'll make a comeback -- okay that's a different issue. It's not where I'd choose to invest but my point is - everyone needs to know why and what they're buying ---- and if the "bet" doesn't work out - then you also need to be able to sell and move on.
NOBODY is going to get it 100% right! EVER! It doesn't happen. I've never been able to make it happen! And you'll find that the "winners" and "losers" rotate! Your big winner this year may be a drag next year… that doesn't mean you just sell it… you "revisit" it and see why you own it - and how it fits your current portfolio - and is it the same company now as it was then etc. Go back to the charts and compare it's performance against like businesses. Sometimes they march in lock step - sometimes they don't - groups go in and out of favor -- That's why you diversify within your investments! Cars can be hot and housing could be hot this year - or for 2 years -- and then flat line for 3 or 5 years… and something else goes gangbusters.
One thing I try to ask myself is "if I sold this" what else would I be SURE of that is going to be better… sometimes I have that answer and sometimes I don't -- if I don't then I usually tend to just let it ride. Same thing with taking some gains off the table --- if I have a big winner -- then sometimes I'll just trim off some of the gain and reinvest it in something else… There's no hard and fast rule to tell you what to do.
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