when is it time to sell ?

[roaddog]

Here's a question for you dudes when is it time to sell and take the profits ?


I bought $10,000 worth of Baycorp shares for $1.07 and $10,000 worth of Tranz Rail for 40c .what i would like to know is how do you dudes decide when to sell ?

[trendy]

This is easy.

A: When wife tells you.

[Oracle]

40 cents for $10,000 worth, that was a great buy!

[Mr Murphy]

hahaha nice one Trendy. I like to invest in young companies that play in industries that I know and I know have good long term growth prospects. These companies are ones like CTL, PVO, EIF etc. Therefore I generally buy shares in companies from 5-30c, meaning I purchase a large number of shares, with little outlay in $.

I guess the ultimate goal is to purchase a company and have it continually growing. In CTL & PVO the shares doubled and I have sold half my holding. This got my money back and still a substantial shareholding for the company to grow and hopefully eventually pay a dividend.

With BCA, I purchased around the $1.20 mark I think and have not sold any of this one because of the work they are doing in the Middle East around their credit bureau’s’, this is a real growth area of theirs.

I guess it does come back to Trendy's point, sell when you need the money. Read Warren Buffets book too, basically you should be picking companies that will continually grow so you don't really ever sell until you have had enough or really need the money (good luck finding these).

Cheers
Murph

[Tim]

Murph, good logic but picking winners consistently is very difficult. Most fund managers are unable to beat the index over time. I have attempted to pick winners before, small companies do well for awhile then go belly up.

[foodee]

RD dude
Must accord significance to the question, when an experienced investor like yourself poses it.

For me, a simple fellow, apply one or all of my 3 criteria for selling:-
[1] When I need money
[2] when there is a better place to park the money
[3] when I feel/sense 'enough is enough', that is when the stock is moving out of my 'comfort zone.'

Of course I have regrets - quite a few, like selling a big chunk of my holding just prior to the Iraq war, but then new doors have open.

To me I am happy when this week is better than last week, and next week is better than this week!

cheers, I would say dude you have a pleasant dilema!:D

[Lawso]

As I said recently on another thread, "Sell in haste and repent at leisure". I've regretted SELL decisions many times more often than I've regretted the BUYs.

Examples would be selling down part of my holdings in NPX and NUF, only to see them keep on rising, and selling out altogether from the likes of IFT and GPG (because I thought they were too slow) and St George Bank in Oz (because I thought there were better prospects in NZ).

I've just sold FIN (doubled my money) and intend to get rid of a couple of others, but mainly because I'm in too many companies. Unless you're smart or lucky enough to anticipate another crash like 1987 (as Muldoon did), I go along with the Buffett philosophy as mentioned by Murph, and also with Sir Bob Jones, whose credo for real estate was "Never sell" - except if I needed the money or could see a much better buying opp.

To be specific, roaddog, in your place I'd hold BCA because it still has upside and take the profit from TRH because there are much better companies to invest in.

[goodguy]

Roaddog, To get back to your original question, I've always found it is best to sell about one week before any share goes into serious decline.

[trendy]

The other strategy to use that Goodguy failed to mention is to buy one week before it goes into a serious upward trend.

[Risk]

sell when your TRADING PLAN tells you to sell.
and if youre trading without a plan: good luck to you.

(Establish a plan and define specific risk and profit objectives before trading...then there is no emotion or indecision)

[Phaedrus]

When is it time to sell? A simple question with a simple answer. When they stop going up.
There are many technical methods of monitoring uptrends - the charts below give a few examples.
(1) Sell when prices drop below the moving average. (Blue line)
(2) Sell when the trailing stop is hit. (Magenta line)
(3) Sell when prices fall below the trendline. (Green line)
Anyone with a large holding could perhaps sell one third on each signal.
http://home.ripway.com/2003-11/39768/BCATRH001.gif

[Burgerbun]

Agree, The hardest part is the call, when is enough enough?


I find it easy to idenitfy undervalued stock.

I regreted too many early sells last year.

However, usually those sells mean youve made a very fast profit or the stock has rerated faster than you anticipated...therefore not really as painful as wondering whether to AVERAGE DOWN;)


eg. Picked IFT as way under NTA and leveraged into the options at 49-50c

Sold 6 weeks later for a 37% gain...to see it go to nearly 200%... within 6 months.

I have been using a combined technique recently, favouring an incorperated TA view as Pheadrus above. Basically using the TRENDLINE... or if forward PER rerates over my risk value as in PVO at 49-50c.


I personally favour a mixture. TA alone shows too many false signals.
Check RPL, for a recent false break...then shot up 30%

[craic]

Isn't TA a self-fullfilling prophesy. If everyone uses the same numbers to generate the same charts, will they not all come to the same conclusion? Will they not all want to sell at the same time, thereby depressing the price of the share? Also, will they not all generate the same the same buy signals at times and create a demand?
Then, off they go to pat themselves on the back. I know small shareholders are just that, small shareholders in most markets, but in the NZ situation, I have seen significant changes in end-of-day prices based on a late trade of an amount of shares so small that it would barely pay my weekly grocery bill.
PS. I did not get up at 3 am just to write this. I got up to make myself a nice cup of tea.

[Burgerbun]

of course that will happen Craic...but because it doesnt...Thats why they can make money from it.



NOT everyone can buy AT the TOP or BOTTOM...someone MUST lose for you to win.

[Risk]

quote:Originally posted by aspex

Risk,
Have you been reading Alexander Elder's "Come into my Trading Room"?

I read that a while ago...and hundreds of other sharemarket books, articles, etc....you can never know too much.:D

Currently reading "The Business of Share trading" by Leon Wilson.
published in Australia in 2003.
Its one of the better books I have come accross, especially if you are just starting out trading from a TA perspective.
It also has the most detailed examples of a Real life trading plan I have come accross....very useful if you havent written one yet.
I dont agree with everything he says, but thats true of any book)

[airedale]

This is a serious question,but one that lends itself to a glib response. One of those iconic American investors said:
"Yeah,I always sold too early, and I made and kept plenty doing it."
My own plan is to sell when the price drops below the moving average.
Thirty day MA for a small fast mover. Eight week MA for a big slow moving heavyweight

[Phaedrus]

Craic, you say "If everyone uses the same numbers to generate the same charts, will they not all come to the same conclusion?" The point is, of course, that they don't. Those following just the three methods mentioned would be split into 8 groups - and that's before you start to alter any parameters. I chose a 50 day moving average, but the figure is quite arbitrary - everyone would be using a different figure. Same with the 12% trailing stop - again, the figure is an arbitrary one. Most people would find that parameter too high or too low and use another figure. Start adding in the choice of different types of moving average, combine that with the fact that trendlines can be drawn in many different timeframes, and you will see that the chances that everyone using these same 3 methods taking the same action at the same time are pretty much zero. There are hundreds of technical indicators available and most of these have variable parameters. There is very, very little chance that a significant group of people using their own combination of TA indicators will act at the same time.
The same indicators can be used in many ways. For example, if you were of the opinion that one of these stocks was fundamentally overvalued, then you would be likely to act (sell) on the very first indicator to fire. If you felt that the stock was fundamentally undervalued, you would perhaps wait until all 3 indicators had fired before acting.
You are right though in that sometimes enough people use the same indicator to make its signals "self-fulfilling". For example, many conservative long-term investors use a 200 day exponential moving average to keep them on the right side of the market. Sometimes you can see increased selling pressure when a stock crosses this particular moving average.

C9, If you find yourself regretting too many early sells, that is easily fixed. Simply make your chosen indicator(s) less sensitive by altering their parameters. When/if you find yourself regretting too many late sells or regret giving too much of your gains back to the market, make your indicators more sensitive. It's all a tradeoff - one characteristic versus another.

Lawso, With regard to stocks, "Never sell" is very bad advice indeed. No gilt-edged bluechip stock is so good that it goes up forever. Without a selling strategy you are simply buying and hoping. You become no more than a passive observer watching your fortune ebb and flow with the market.

Risk, It is my belief that a trading strategy must be tailored to the individual for it to be effective (ie followed). Good on you for not accepting everything you read. Do what is right for you.

[Risk]

quote:Originally posted by Phaedrus

When is it time to sell? A simple question with a simple answer. When they stop going up.

that would be the ideal...
but depends on your timeframe, and many other things.
The trend could be up, but you can still sell:
-some fundamentalists sell once PE reaches a certain level.
-Some technical analysts sell when the indicators they use reach certain levels, which may indicate that a turnaround is likely.
-some chartists sell when they see a recognisable pattern in the chart.
-some can sell on insider knowledge.
-some trades I have entered knowing that I would get out at a certain resistance level. (and also knowing I may buy back in later at a given support)

If you're a long term holder, and dont mind giving 12%+ back, then Phaedrus examples are pretty good options...but there are hundreds of other options at your disposal.
and remember: for everyone selling, there is someone buying!

disc: sold some BCA last friday...still holding on to some more[8D]

\edit: I was writing this while Phaedrus said more or less the same thing...there's lots of ways to sell.[8D]

[Scooter]

my advice is to take your original money out as both stocks have increased in value by over 200%.

Leave the balance where it is to get the best freeride you will ever get.

hold BCA

[Toulouse - Luzern]

So,

looking at Phaedrus chart and if you need some $$$$$ it seems to me that BCA is looking better to hold than TRH .....

Another question from this point on where is the buy signal for BCA & for TRH?

[Awryly]

Technical indicators are useful and there's no way they should be ignored. But what the discussion has not done so far is to highlight the need for different strategies for different stocks. TRH for example required a strategy different from one you might use for Telecom. Growth stocks can be traded in different ways - long-term hold or troughs and peaks. You've got to know your stock and what you want out of it.

[Lawso]

Thanks, roaddog, you started a great thread here. And thanks to the many great contributors. I for one have learnt a lot from them. It's an example of why ShareTrader is so worthwhile (despite the odd goofball).

I guess it's obvious that I'm not into technical analysis, charts and graphs but I have great respect for those who are. Being an accumulator rather than a trader, I'm sticking to my "Never sell - well, hardly ever" policy and it's served me well over the years, especially while NZ and Aust markets have been doing so well. Also, being well weighted on blue and near-blue chips, balanced with a few thou in solid fixed interest, I reckon I'm reasonably insulated against a downturn.

[The P.O.D.]

Yes, an interesting topic.

For me, it all depends on a number of things which can be loosely summarised as "opportunity cost". This can encapsualte a variety of things such as risk, volitility, future dividends, the market as a whole, the sector, other oppurtunities,etc.

With a near continual rising market I seem to think that holding is best with proportional sell offs after a quick rise and a platuae in price/volume. You have then locked in a bit of profit. You can then wait and see the next movement. You can then either buy back in or sell depending. If you miss out a bit on the next rise you can consider this insurance. eg. If you double your money then sell 50%, if the price rises 50% then sell 25%. You can sometimes pyrimad up quite nicely using this strategy. I have used it to reasonable succes on Maxitrans (ASX) and CDL.

A dividend growth stock then refer to Buffetology.

If something better comes along.... there's no such thing as a free lunch and greed has always been the downfall of the masses. I ussually find that a good stock stays a good stock for 2-3 years and that is ample time to assess other oppurtunities.

In roaddogs case, I would sell at least 75% of TRH and 50% of BCA.

[foodee]

Yes a good thread.
Please that I do not need to modify my strategies at present.
My own feeling is that the biggest risk factor is 'human greed'and that may or maynot be controllable depending on your philosophy.

Now back to the crux, RD dude seeing that you pose the question; you will let us know your action(s), if any - after the event of course!;)
ps: + your rationale for acting

[JAMP]

My father-in-law recommended to me a while back that as a general rule of thumb he sold after making a 30% gain on a stock. After all, there is never any harm in leaving a little in reserve for the next person, and why not be happy with a 30% gain?

Traditionally I have sold out well under this mark, but am actively trying to strenghten my discipline in this area.

I am sitting on KCE at the moment which is up just under 40% from when I purchased it in October 2003. I would be selling now but for the fact that they have yet to migrate from the UCM to the NZAX. As a small stakeholder the additional paper-handling fees for selling takes a little too much gloss off the gain for my liking. I am likely to be cursing my greed before the end of the month.

Regards JAMP
NZX: MCH RBD SKX SPN VTX WRI
UCM: KCE

[ragwort]

Will be very interesting to see what effect Genesis has had on KCE since moving into their ground. I reside in the KCE area and can confirm that once Genesis announced they were coming to the area customers left KCE in droves. KCE not at all popular with locals partly because of power increases, mainly because of appalling customer service.

[glennj]

One perspective is that it time to sell when the buy criteria no longer apply.

I largely ignore TA when deciding when to sell but may have a look at relative strength and trend lines when I know a stock is overvalued and am wavering as whether to quit immediately or hang in for a bit more possible gain. May occasionally use a trailing stop loss or sell half rather than dump the lot when a stock is clearly overvalued but is not yet on the way down.

Old fashioned valuation methods and application of price sales ratio and price earnings ratio screens appropriate to the company sector, growth rate and profit margins being earned make it clear cut when you should be looking at getting out. IMHO selling out when you've made a predetermined percentage is silly if the stock is not overvalued.

Non performance, negative relative strength and insider selling are potential sell signals. Watch for signals eg. signs that competitors are hurting the stock, that there are problems at board level or a major cyclical downturn is underway.

Often if you are in the right stock you never need to sell! They can keep giving good capital growth and dividend yield without reaching an extreme of overvaluation. Sometimes better opportunities elsewhere, a takeover offer or compulsory acquisition makes your mind up for you as to when to sell.

[roaddog]

hi dudes,
roaddogs taken his profits:D


Toll NZ Limited sold @ $1.74 bought for 40c
Baycorp Advantage Limited sold @ $3.33 bought for $1.07c



time to look at some other investments ....:)

[Speculator]

I sell when any of the following occur:

1. The stock is grossly overvalued.
2. When a Maori is appointed to the board of directors.
3. When the annual report first refers to the word 'stakeholders'.
4. When an academic is appointed to the board - this is usually contemporaneous with the use of the word 'stakeholder'.
5. When highly educated sons or grandsons of founders ie Hugh Fletcher are appointed to boards. What did he cost the shareholders - $5 billion? or something.

Similarly I will never buy a stock where:

1. A Maori is a director.
2. MacQuaries are involved ie ALH.
3. Where it is an Aussie or American shakedown of Kiwis or a textbook scam ie. Vertex (pump and dump).

[Placebo]

quote:2. When a Maori is appointed to the board of directors.


lol

How about when it's a Cushing or when the chiefs do a Brierleys and start holding board meetings in the Bahamas and decking out the corporate jet in whaleskin... Then you know your money is being put to "good" use :D

[spector]

if i was you roaddog, i'd sell 33%-50% of each stock. That way you make good profit on your original investment... but still have shares left over which may still have potential growth.

If the shares go belly-up then you're still better off than you when started. And if the shares continue to grow then you're way ahead.