A Reader Writes "What is your strategy....?"
Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice! As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.
One of my favorite things about writing a blog is reading and responding to questions and comments from readers. And when I get a letter from 'overseas', then it is all the more special. And when a reader like Dror is kind enough to write more than once...well it is just special! O.K., enough of the sentimental stuff. Let me share with you what Dror wrote and what my thoughts are on the subject.
I've been wondering what is your strategy on stocks that do not get out of your -8% and the +30% thresholds for a few months...
When will you take them out of your portfolio, will you wait a quarter, two, or wait indefinitely until some threshold is broken?
Bob, I really appreciate your perseverance on sharing your thoughts and strategies with everybody.
Thanks so much,
Dror (From Israel, yes ;-)"
Thank you so much for writing! The question, as I see it, is what to do when a stock in a portfolio is a bit lethargic, sitting between the extremes of my first sale...either on the downside at an 8% loss, or on the upside at a 30% gain. Should you be impatient and unload the stock or hang in there?
Basically, when a stock sits for a long time....for instance my Wolverine World Wide (WWW) which I held for over a year before selling my first partial position today...I generally sit tight. Of course, I try to review the fundamental information I can glean from the internet....double-check each quarterly report, look at the news etc. If there is anything wrong with the company, I always reserve the right to unload any position without regard to any trading rules.
But if everything is intact and yet the stock price is not responding, perhaps it is a question of the market environment. If we are to believe that our portfolios are able to tell us when to commit more funds to the market...as I do...by hitting sales targets on the upside. And if we accept that sales within our portfolios may well indicate a "sick" market environment leading me to "sit on my hands" on proceeds from sales on the downside, then it goes as well that failure to move either way may well represent the result of a market itself that is in the doldrums, sort of listlessly trading in a range of prices.
Patience is indeed a virtue. I haven't been doing much trading at all the last six months and then today two of my holdings hit sale points at targeted gains. So one never knows.
I believe it was Antoine St. Exupery who in The Little Prince wrote "On ne sait jamais." I am not sure why that quote just hit me as significant, but then again, there must be a reason :).
Thanks again for writing, for participating, and for being a loyal reader. Things like that mean a lot to me!
Your friend and fellow investor,