Take profits or cull poor performers?

[Brovendell]

I suppose the way to go is the Buffet way and consider the shares as parts of a business. Forget about the share price and the p/es and ask oneself which business would one rather own going forward. The answer then becomes quite evident.

[percy]

With the increase in equities this year, I need to rebalance my portfolio. Do I take profits in NZE:POT with a P/E of 39.5 or do I sell ASX:TGA with a P/E of 11.45?

Keep your winners,sell your losers.
Try to have only winners in your portfolio.

[Snoopy]

I suppose the way to go is the Buffet way and consider the shares as parts of a business. Forget about the share price and the p/es and ask oneself which business would one rather own going forward. The answer then becomes quite evident.

I don't think Buffett ever 'forgets about the share price'. It is quite the contrary. It is the share price that determines value. If the value isn't there then Buffett won't buy it, regardless of how good the company is.

SNOOPY

[Brovendell]

I understand what you are saying Snoopy but my cunundrum is which company to SELL to balance the portfolio asset allocation. In other words to increase the cash component and reduce the share component. I have sold down POT in the past and watched the shareprice go up and up. As a long term holder of shares, I can't see Thorn Group giving a better return in the future than POT. The problem is the very high price that "Mr Market" puts on POT. I must say that I agree with Percy. I am not a trader. I think I am better off long term keeping my "winners".

[h2so4]

I understand what you are saying Snoopy but my cunundrum is which company to SELL to balance the portfolio. I have sold down POT in the past and watched the shareprice go up and up. As a long term holder of shares, I can't see Thorn Group giving a better return in the future than POT. The problem is the very high price that "Mr Market" puts on POT. I must say that I agree with Percy. I am not a trader. I think I am better off long term keeping my "winners".

All my boats are measured by the tonnage. So at 9500 tons POT would get up to 25% allowable space and TGA at 1000t would be allocated up to 10% Of course I am referring to market cap and my portfolio balancing takes place at the time of purchase. I have never seen a need to rebalance after that.

[GTM 3442]

I understand what you are saying Snoopy but my cunundrum is which company to SELL to balance the portfolio asset allocation. In other words to increase the cash component and reduce the share component. I have sold down POT in the past and watched the shareprice go up and up. As a long term holder of shares, I can't see Thorn Group giving a better return in the future than POT. The problem is the very high price that "Mr Market" puts on POT. I must say that I agree with Percy. I am not a trader. I think I am better off long term keeping my "winners".

I tend to rebalance incrementally over time.

So if one asset class is doing well, rather than chop that one back, I try to build up the others - interest income, dividends, new money, money from selling the dogs, etc.

It takes time, is a dynamic process, I never actually get to my desired allocation profile, but I'm always heading in the right direction.