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30-05-2020, 12:19 PM
#6691
Member
If a company is doing well enough that you can sell half your holding and get your original money back why sell at all. If it still has prospects for good returns I'd want to keep all the money there rather than transfer to something not working as well.
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30-05-2020, 01:36 PM
#6692
Originally Posted by DazRaz
If a company is doing well enough that you can sell half your holding and get your original money back why sell at all. If it still has prospects for good returns I'd want to keep all the money there rather than transfer to something not working as well.
The doubling scenario was simply an example. You can achieve the 'free hold' in numerous ways.
Another example;
Say you held 30k ATM shares from .50c to $15.00 at which time you only needed to sell 1k shares to freehold the remainder. ATM has yet to double from from $15 to $30, while elsewhere there may be greater growth (in say) PLX, PPH, BLT or whatever....
Selling strategically also provides some advantage in allowing your portfolio to become more diversified.
There are also times when a SP 'gets ahead of itself" and that is a good time to 'freehold' by selling down for example in 2016 BLT was 6c before slumping down to 2c for most of 2018. Maybe it was a better option to have your $'s elsewhere before coming back in again in the more recent time?
Sometimes share investment is an 'art' rather than a 'science'. Keep an open mind and DYOR.
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30-05-2020, 02:19 PM
#6693
Junior Member
Originally Posted by Left field
The doubling scenario was simply an example. You can achieve the 'free hold' in numerous ways.
Another example;
Say you held 30k ATM shares from .50c to $15.00 at which time you only needed to sell 1k shares to freehold the remainder. ATM has yet to double from from $15 to $30, while elsewhere there may be greater growth (in say) PLX, PPH, BLT or whatever....
Selling strategically also provides some advantage in allowing your portfolio to become more diversified.
There are also times when a SP 'gets ahead of itself" and that is a good time to 'freehold' by selling down for example in 2016 BLT was 6c before slumping down to 2c for most of 2018. Maybe it was a better option to have your $'s elsewhere before coming back in again in the more recent time?
Sometimes share investment is an 'art' rather than a 'science'. Keep an open mind and DYOR.
This is a theory I have employed, actually just did this two days ago by selling down on BLT and have moved to put the profit funds into Oceania Healthcare for a more long term hold and strong dividend stock. Hopefully one day in a few years or even 4 - 5 years I will be able to sell down on OCA and move to another growth stock. It is a good way of diversifying off your original investment.
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30-05-2020, 02:57 PM
#6694
Originally Posted by Left field
The doubling scenario was simply an example. You can achieve the 'free hold' in numerous ways.
Another example;
Say you held 30k ATM shares from .50c to $15.00 at which time you only needed to sell 1k shares to freehold the remainder. ATM has yet to double from from $15 to $30, while elsewhere there may be greater growth (in say) PLX, PPH, BLT or whatever.....
Another example - sell your car + buy a bike, and spend the leftover on shares, which you could call freehold or any other misnomer if you so wish. Or you could use standard English and call them unencumbered.
Last edited by fungus pudding; 30-05-2020 at 03:18 PM.
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30-05-2020, 04:51 PM
#6695
I still have trouble with the “free carry” or “free held” idea, especially when it comes to being “de-risked”. Let’s plug Promisia Integrative (PIL) into the model and see what happens.
You buy 200,000 PIL at $0.006 for $1200. After a year or two, you sell 100,000 PIL at $0.04 for $4,000. Well done!
You now have 100,000 PIL. Cost $600, value $4,000 and $4,000 in cash. A total of $8,000
You have $4000 in cash, and your $4,000 cash is not at risk, but your $4,000 of Promisia shares is at risk.
MoH/Pharmac/whoever then drop their Artemisia bombshell and the Promisia share price goes to $0.002
Your current 100,000 PIL shares are now worth $200, against a cost of $600. This leaves your current PIL holding underwater to the tune of $400. How does the idea of “free held” cope with this loss?
Last edited by GTM 3442; 30-05-2020 at 04:52 PM.
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30-05-2020, 04:59 PM
#6696
Junior Member
Originally Posted by GTM 3442
I still have trouble with the “free carry” or “free held” idea, especially when it comes to being “de-risked”. Let’s plug Promisia Integrative (PIL) into the model and see what happens.
You buy 200,000 PIL at $0.006 for $1200. After a year or two, you sell 100,000 PIL at $0.04 for $4,000. Well done!
You now have 100,000 PIL. Cost $600, value $4,000 and $4,000 in cash. A total of $8,000
You have $4000 in cash, and your $4,000 cash is not at risk, but your $4,000 of Promisia shares is at risk.
MoH/Pharmac/whoever then drop their Artemisia bombshell and the Promisia share price goes to $0.002
Your current 100,000 PIL shares are now worth $200, against a cost of $600. This leaves your current PIL holding underwater to the tune of $400. How does the idea of “free held” cope with this loss?
Really? I would challenge you to actually read what you just wrote. You have taken out $4000 cash of an initial investment of $1200. You have $2800 profit in your wallet and the shares that are left in PIL carry absolutely no risk IN RELATION TO YOUR INITIAL CAPITAL INVESTMENT. they are therefore “effectively” freehold.
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30-05-2020, 05:04 PM
#6697
Originally Posted by GTM 3442
I still have trouble with the “free carry” or “free held” idea, especially when it comes to being “de-risked”. Let’s plug Promisia Integrative (PIL) into the model and see what happens.
You buy 200,000 PIL at $0.006 for $1200. After a year or two, you sell 100,000 PIL at $0.04 for $4,000. Well done!
You now have 100,000 PIL. Cost $600, value $4,000 and $4,000 in cash. A total of $8,000
You have $4000 in cash, and your $4,000 cash is not at risk, but your $4,000 of Promisia shares is at risk.
MoH/Pharmac/whoever then drop their Artemisia bombshell and the Promisia share price goes to $0.002
Your current 100,000 PIL shares are now worth $200, against a cost of $600. This leaves your current PIL holding underwater to the tune of $400. How does the idea of “free held” cope with this loss?
hey mate - your remaining 1000 cost you negative $3800 - average cost of -$0.038 - essentially you have been 'paid' to 'buy' these 1000 shares ... cool eh
Thats how most calculate their average cost
”When investors are euphoric, they are incapable of recognising euphoria itself “
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30-05-2020, 07:08 PM
#6698
Member
That highlights why the price you paid for a share is of little relevance. I think people use that to feel good that they are progressing and have made money. Sell down methods to "free hold" is just a mind trick to feel immune to losses.
As for rebalancing portfolios I still would question why you sell a well performing share. You may be able to rebalance by changing where new money goes. I'd rather be unbalanced than sell down a great share.
Personally, my share investments are insignificant compared to my property investments, so balancing sectors makes ATM makes little difference to me.
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30-05-2020, 07:26 PM
#6699
Originally Posted by winner69
hey mate - your remaining 1000 cost you negative $3800 - average cost of -$0.038 - essentially you have been 'paid' to 'buy' these 1000 shares ... cool eh
Thats how most calculate their average cost
Sh*t!
I should have bought a million of them and waited for the price to go to $0.001 - I'd have been rich!
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30-05-2020, 10:02 PM
#6700
Originally Posted by DazRaz
That highlights why the price you paid for a share is of little relevance. I think people use that to feel good that they are progressing and have made money. Sell down methods to "free hold" is just a mind trick to feel immune to losses.
As for rebalancing portfolios I still would question why you sell a well performing share. You may be able to rebalance by changing where new money goes. I'd rather be unbalanced than sell down a great share.
Personally, my share investments are insignificant compared to my property investments, so balancing sectors makes ATM makes little difference to me.
I'd rather actually read the reports and alter/reposition/enter/exit based on the phase or period a company is going through by actually evaluating the reports released and current tailwinds or headwinds and actually make informed decisions rather than buying a company based on an idea or feel good hypothesis.
With the above approach you can put in large sums of money and actually sleep at night for an adequate return rather than entering at a price where buyers exhaust and low volume drifts the shareprice down for 8 months, clinging to the idea you have the next CSL or Xero.
Could end up with a GenTrack if you sit tight and ignore everything
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