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Bolton, Lynch, Woodford, Buffett and Graham tell you when to sell.
I'm considering what tips they'd give you for when to sell. Some of the advice is a little contradictory, but the common theme is to step back from what everyone else is doing, so that you can make your own mind up.
Anthony Bolton might advise:
* Don't sell when the market looks at its absolute worst, because that will probably be the bottom.
* Ride out volatility, don't dip in and out of the market. It's too difficult to call.
* When the market's booming, the share price of your investment has followed and commentary is focused completely on the positive aspects of the company, you need to be at your most wary.
* Above all, sell when you see that the share is fully valued.
Peter Lynch would say:
* Don't sell because the economy looks bad. Always stay invested, because your profits do not depend on the economy as a whole.
* Sell your steadier holdings when their PEGs reach about 1.2 to 1.4 or when the long-term growth rate starts to slow.
* Sell fast growers when there appears to be no further scope for expansion or when expansion starts to produce disappointing sales and profits growth, or when the PEGs reach about 1.5 to 2.0.
* Sell asset plays when they are taken over, or when assets that are sold off fetch lower-than-expected prices.
Neil Woodford might recommend:
* You shouldn't try to make too many course changes. It's cheaper to hold shares for five or six years, on average...
* ...I said 'on average'. Don't ignore poor performers. Identify them and deal with them accordingly.
* Sell when the stock, which you bought because it was out of favour, becomes the darling of the market once more.
* In troubled economic times, stick with the companies that are financially sound. The market goes through periods where it believes in economic recovery and anticipates that by bidding up cyclical shares at the expense of defensive stocks. Don't be led by the market.
Warren Buffet would quip:
* The ideal holding period for a stock is forever. That doesn't happen very often in practice, but many good businesses stay fair value for ages, so you can hold for a considerable time.
* Consider selling when everyone is being greedy, not when they're fearful.
* Don't try to predict the direction of the stock market, the economy, interest rates or elections. It just distracts you from buying and holding good companies.
* Just because the crowd is selling it doesn't mean you should. You should sell when your data and reasoning say so.
Benjamin Graham might suggest:
* Don't be dictated to by Mr. Market. Sell when your holdings become way overvalued.
* Consider selling shares you've held more than two years, shares that have risen more than 50%, shares where dividends have been stopped, and shares where profits have dropped enough to make it over-priced by 50% based on earnings yield.
* Don't panic and sell shares as prices slide in a bear market -- consider buying more.
* If you're confident about what you're doing, you should hardly ever be forced to sell, nor should you care about the current price. You should act upon it just to the extent that it suits you.
BY Neil Faulkner
Published in Investing Strategy on 28 August 2009
http://www.fool.co.uk/news/investing/investing-strategy/2009/08/28/20-ways-to-decide-its-time-to-sell.aspx
I'm considering what tips they'd give you for when to sell. Some of the advice is a little contradictory, but the common theme is to step back from what everyone else is doing, so that you can make your own mind up.
Anthony Bolton might advise:
* Don't sell when the market looks at its absolute worst, because that will probably be the bottom.
* Ride out volatility, don't dip in and out of the market. It's too difficult to call.
* When the market's booming, the share price of your investment has followed and commentary is focused completely on the positive aspects of the company, you need to be at your most wary.
* Above all, sell when you see that the share is fully valued.
Peter Lynch would say:
* Don't sell because the economy looks bad. Always stay invested, because your profits do not depend on the economy as a whole.
* Sell your steadier holdings when their PEGs reach about 1.2 to 1.4 or when the long-term growth rate starts to slow.
* Sell fast growers when there appears to be no further scope for expansion or when expansion starts to produce disappointing sales and profits growth, or when the PEGs reach about 1.5 to 2.0.
* Sell asset plays when they are taken over, or when assets that are sold off fetch lower-than-expected prices.
Neil Woodford might recommend:
* You shouldn't try to make too many course changes. It's cheaper to hold shares for five or six years, on average...
* ...I said 'on average'. Don't ignore poor performers. Identify them and deal with them accordingly.
* Sell when the stock, which you bought because it was out of favour, becomes the darling of the market once more.
* In troubled economic times, stick with the companies that are financially sound. The market goes through periods where it believes in economic recovery and anticipates that by bidding up cyclical shares at the expense of defensive stocks. Don't be led by the market.
Warren Buffet would quip:
* The ideal holding period for a stock is forever. That doesn't happen very often in practice, but many good businesses stay fair value for ages, so you can hold for a considerable time.
* Consider selling when everyone is being greedy, not when they're fearful.
* Don't try to predict the direction of the stock market, the economy, interest rates or elections. It just distracts you from buying and holding good companies.
* Just because the crowd is selling it doesn't mean you should. You should sell when your data and reasoning say so.
Benjamin Graham might suggest:
* Don't be dictated to by Mr. Market. Sell when your holdings become way overvalued.
* Consider selling shares you've held more than two years, shares that have risen more than 50%, shares where dividends have been stopped, and shares where profits have dropped enough to make it over-priced by 50% based on earnings yield.
* Don't panic and sell shares as prices slide in a bear market -- consider buying more.
* If you're confident about what you're doing, you should hardly ever be forced to sell, nor should you care about the current price. You should act upon it just to the extent that it suits you.
BY Neil Faulkner
Published in Investing Strategy on 28 August 2009
http://www.fool.co.uk/news/investing/investing-strategy/2009/08/28/20-ways-to-decide-its-time-to-sell.aspx
