When we buy and sell

Discussion of the proposed Cashback Investment Club

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garindan
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Re: When we buy and sell

Post by garindan » Sun Mar 13, 2016 8:54 am

William Joseph wrote:
garindan wrote: It is not all about one share trade. We have to consider the bigger picture over a longer period :)
I do understand what you are saying. But it is not about one share. There is a portfolio of shares.
That was what I meant by the above :lol:
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garindan
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Re: When we buy and sell

Post by garindan » Sun Mar 13, 2016 9:19 am

I would like to draw people's attention to my thoughts specifically point 4 I make in this thread.

Portfolio size should be loosely determined by what our investment strategy is. We need to conclude whether we want a solid foundation of income generators we stick with as our bread and butter over the long term, whether we want to twist with any slightly riskier shares to make a profit by selling and what the composition of this is. Only then do we know what our objectives are, when we have achieved any of them and how we progress.

Thus, say for instance we did wish to do what I suggest for example sake, the objectives might be as follows:

Baseline objective : Grow portfolio to include 4 income generating and up to 3 profit generating shares
1) Purchase next income generator share
2) Purchase next profit generator share

Baseline objective : Exit from profit generators
1) Continually review the 'climate'
2) Set exit conditions
3) Sell when exit conditions met

Baseline objective : Monitor income generators
1) Continually review the 'climate'
2) Set exit conditions (all shares have their price no matter what...)
3) Set purchase conditions (when we think the price is attractive)
4) Set a purchase preference (i.e. which share we would prefer to buy if conditions are right for more than one)
5) Purchase / Sell when conditions met

Baseline objective : Create potential purchase list
1) Review FTSE250 for potential purchases for both income generation and profit generation
2) Build a priority list for each
3) Set purchase conditions for every potential purchase on each list

If we have all the above set, do some reasonably sound research we can set and review thresholds for selling and purchasing. Once agreed we can then avoid timewasting polls. This would make us more strategic and all us to react to favourable market conditions, especially if we have cash in our account as kevinchess1 noted.

The key to the above is setting out a good plan, with these threshold numbers and doing good research. We also then need to have confidence in what we have decided and go with it :thumbup:
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garindan
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Re: When we buy and sell

Post by garindan » Mon Mar 14, 2016 7:35 pm

Any thoughts about the above and all the earlier posts on the topic? Would members please post their considerations and how they feel the best way forward looks?

Perhaps we can then agree on some of these matters and set out our next steps! :thumbup:
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Re: When we buy and sell

Post by AAAlphaThunder » Mon Mar 14, 2016 11:01 pm

garindan wrote:Any thoughts about the above and all the earlier posts on the topic? Would members please post their considerations and how they feel the best way forward looks?

Perhaps we can then agree on some of these matters and set out our next steps! :thumbup:
The best ideas are oh sooo simple. I propose:
1. Identify if the share is short-term, medium-term or long-term investment;
2. Short-term sell at 11% profit;
3. Medium-term sell at 23%;
4. Long-term sell at 33%;
5. Hold only to sell at a profit - no selling at a loss;
6. Keep on buying more shares with new money and dividends.
Whilst unorthodox, I do something along these lines myself and have never made a loss. You would be surprised at how quickly the dividends add up.

The key is to hold your nerve and never blink.
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Re: When we buy and sell

Post by AAAlphaThunder » Tue Mar 15, 2016 12:36 pm

Often you just have to bite the bullet and sell your stock at a loss before those losses get bigger. The first thing to understand is that hope is not a strategy. An investor has to have a logical reason to hold a losing position. The second point is, what you paid for a stock is irrelevant to its future direction. The stock will go up or down based on forces in the stock market, the stock's underlying fundamentals and its future prospects.
Suppose you have a portfolio of 10 shares and your target is to generate a 15 per cent return. One of your shares falls by 20 per cent. In order to generate an overall return of 15 per cent, how well do your other nine shares now have to perform? They now have to grow by an average of 17.8 per cent to offset the impact of the laggard. As the table shows, if the share falls 50 per cent, the hurdle rate for the other nine rises to 22.2 per cent. And if your target return happens to be 20 per cent a year, well, let Mr Mitchell speak for himself: "If your target average is 20 per cent, any single loss above 30 per cent means you are looking for your nine winners to beat Warren Buffett's 40-year average of 25.6 per cent. You are no longer on Mission Achievable, you are on Mission Impossible."

Loser falls: how much the other nine must make

15% target 20% target

-10% 17.8 23.2

-20% 18.9 24.4

-30% 20.0 25.6

-40% 21.1 26.7

-50% 22.2 27.8
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Re: When we buy and sell

Post by AAAlphaThunder » Wed Mar 16, 2016 1:08 pm

How about we do something simple. I propose:
1. Identify if share is short-term, medum-term or long-term investment.
2. Agree a standard profit/loss for each type of investment.
3. Have a poll once we are nearing the profit/loss threshold.
3. Sell when we reach profit/loss threshold.
4. In the meantime, keep on building up our investments.
I, personally would like to see many investments paying good and poor dividends with most being sold over time at a profit.

With a bit of good fortune, perhaps we turn free money into a supplementary form of income.
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William Joseph1
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Re: When we buy and sell

Post by William Joseph1 » Wed Mar 16, 2016 1:30 pm

underdog wrote:How about we do something simple. I propose:
1. Identify if share is short-term, medum-term or long-term investment.
2. Agree a standard profit/loss for each type of investment.
3. Have a poll once we are nearing the profit/loss threshold.
3. Sell when we reach profit/loss threshold.
4. In the meantime, keep on building up our investments.
I, personally would like to see many investments paying good and poor dividends with most being sold over time at a profit.

With a bit of good fortune, perhaps we turn free money into a supplementary form of income.
Why 3.? If an agreement has been made no need for a poll.
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Re: When we buy and sell

Post by AAAlphaThunder » Wed Mar 16, 2016 3:30 pm

William Joseph wrote:
underdog wrote:How about we do something simple. I propose:
1. Identify if share is short-term, medum-term or long-term investment.
2. Agree a standard profit/loss for each type of investment.
3. Have a poll once we are nearing the profit/loss threshold.
3. Sell when we reach profit/loss threshold.
4. In the meantime, keep on building up our investments.
I, personally would like to see many investments paying good and poor dividends with most being sold over time at a profit.

With a bit of good fortune, perhaps we turn free money into a supplementary form of income.
Why 3.? If an agreement has been made no need for a poll.
I'm pleased to have you on-board.

Before you joined the CIC SBRY went down ~20%. We voted to ride out the storm. Today, SBRY is ~0%. So it was a good choice. We assessed the circumstances just before our potential sale and decided against selling at a 20% loss. As things have transpired it was a good move.

Understand?
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Re: When we buy and sell

Post by William Joseph1 » Wed Mar 16, 2016 4:39 pm

No I do not understand. No point in having a profit and loss position if you then vote to ignore it. A poll takes a minimum of one week to conclude. The whole idea of deciding in advance is to speed things up and avoid the need for a vote.

Also on a personal note. I am not a child and do not expect to be talked down to. Which is which (and I am sorry if I got it wrong) your post seems to be doing.
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