Should I sell my shares - or keep them?
I don't need the money, but would it show a better return in a cash ISA?
In other other words, have equities reached the top and the trend in the short to medium term is downwards?
Last edited by: Duncan on Sun 29 Jun 14 at 16:32
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That's easy. Probably don't sell unless you need the money.
www.fool.com/investing/general/2014/04/09/youll-never-be-warren-buffett-but-you-can-invest-l.aspx
Or any of a million other ways of saying it.
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Seriously?
Anybody who could time the market like that would be the world's greatest investor.
I suppose the smart answer, but not very helpful, is that a cash ISA will not show a better return than an equity income fund - but it will keep your capital safe (except for the ravages of inflation, which I fully expect the government to run higher than interest rates).
But - assuming you have had a proportion of your savings in equities, and the rest in something else, what you can do is rebalance. By doing that, you tend to be selling stuff when it is dearer, and buying it when it is cheaper (assuming you do the converse when equities have had a period of reversal).
Rebalancing brings down your risk.
The traditional approach has been equities, bonds, cash, and sometimes property in proportions that match your objectives, horizon and your risk profile.
The problem many have perceived since the banking crisis is that bonds have been too dear, in a bubble even, so the standard approach of moving the proceeds of equity over performance into bonds has seemed risky too.
Rightly or wrongly, as my own pension manager, I have preferred income to growth stocks, mostly held in funds or passive ETFs, (the yield offers some support to the price) and whilst I have some bond exposure through funds, I have also been holding some absolute return style funds like Ruffer, GARS, and Newton AR. (with hindsight a bit of a let down for the last couple of years as 2 of those have been Absolutely No Return funds for me over the period I've had them).
The single best thing I've had for the last year has probably been a property investment trust (TRY) but that's a small proportion of the total. The worst, which I should not have been holding anyway as in principle I don't pick individual stocks, is Barclays where there is no end to bad news it seems. Tesco was another of my 'bets' that did OK for a while...
Like most people, I'm emotionally unsuited to investing. Some holdings have gone backwards at a rate in the last year, when in general equity markets here, in Europe and the US have done well.
It's hard not to see setbacks on holdings such as AASC, a Pacific Index tracker, a Japan tracker, and Troy Trojan, some of which has gone backwards more than 20%, as bad decision making - but if your aim is that your risk investments are not all correlated, that's what happens :). I'd rather sell things because they have gone up, than because they have gone down; the reverse for buying.
Wouldn't dream of giving you advice, but some respected fund managers have increased their cash holdings, and even gold. That's brave - they are unlikely to come top of the rankings, but they are reducing risk for their investors.
The only advice I feel confident in giving anybody is to avoid all and any investments in wine, cars, hardwood plantations, real estate in Brazil ( www.bbc.co.uk/news/business-28013148 ) etc unless you know an awful lot more about it than the people flogging it to you. What really breaks your heart is that the people who go in for this sort of thing, pushed by people who deliberately use unregulated investments, have often put their life savings in.
fixed the BBC link that wasn't working
Last edited by: VxFan on Mon 30 Jun 14 at 01:12
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Three things matter;
How much you can afford to lose the money you invest / how much risk will you take?
How long a term decision are you making?
What return on your money are you seeking?
Those three factors, or at least their combination, entirely decide on the advisability and/or suitability of any investment you can make. However, risk vs reward always factor; the greater the risk, the greater the reward. Of if you prefer, the greater the risk, the greater the chance of losing the lot.
Last edited by: No FM2R on Sun 29 Jun 14 at 20:13
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When I was in a similar position I was advised to sell half of them. That way you mitigate your losses (if there are any), but you only make half the profit it goes the other way.
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A fair point.
FWIW my approach was to be conservative until I had amassed sufficient to remove my original stake from the pot. And then I got increasingly aggressive, repeatedly removing an amount equivalent to my original stake as often as the account could afford to do so.
Consequently, when I inevitably made a bad decision, I lost only some of the profit on the profit on the profit of the profit, not my own money.
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Property only, other than a piffling amount of BT shares. Haven't gone wrong yet.
I understand property. The other stuff is just a dark art and I'll never 'get it'.
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if it helps........
Sold the lot over the past 12 months.
Now I do not own a single share or have any other sort of investment. Currently, it's solely cash and property.
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Surely to answer the question we'd need to know what shares? Are these shares in individual companies? If so, it would all depend on your assessment of that particular stock.
Or is this an investment in a unit trust, tracker fund, or something that broadly follows the stock market, in which case overall market and economic considerations would apply.
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The maxim used to be 'sell in May and go away - come back on St Leger Day'.
For what it's worth...
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>> Surely to answer the question we'd need to know what shares?
A couple of utilities companies. A couple of pharmaceutical companies. An insurance company. A mobile phone and broadband provider. I am not including other equity based investments managed by other companies.
I realise that my question is almost impossible to answer, even in a downturn in the market some equities will still appreciate.
My question might be better put "which equities will gain or lose value over the next couple of years?"
My own thoughts are that the stock market will either go sideways or lose value in the short to medium term.
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>> if it helps........
>>
>> Sold the lot over the past 12 months.
>>
>> Now I do not own a single share or have any other sort of investment.
>> Currently, it's solely cash and property.
That's great if it works for you - i.e. you didn't want the risk, or you had an alternative investment in mind. But it does illustrate the problem in timing the market. The FTSE All Share is up 12% on a total return basis over the last year.
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>>I lost only some of the profit on the profit on the profit of the profit, not my own money.
A very peculiar way of looking at it, because of course it's your own money... But I get what you mean - you're then gambling with something that feels remoter from your own cash. But that'll probably be why my SIPP outperforms my ISA; it feels less like my own money...
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>>
>> A very peculiar way of looking at it, because of course it's your own money...
>> But I get what you mean - you're then gambling with something that feels remoter
>> from your own cash.
I think that's the distinction - are you gambling or investing?
If you put money on an outsider just for a bit of a flutter, and amazingly it triples your money for you, I can see that it might make sense to treat the profit as free cash, to risk on a bit more fun without minding too much if you lose some of it.
But if your pension pot triples in value over 20 years you probably would regard it all as your own hard-earned money, not to be gambled lightly.
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>> Now I do not own a single share or have any other sort of investment.
>> Currently, it's solely cash and property.
" That's great if it works for you - i.e. you didn't want the risk, or you had an alternative investment in mind. But it does illustrate the problem in timing the market. The FTSE All Share is up 12% on a total return basis over the last year. "
Over the years I've come out on top (not by a lot) with equities in PEPs / ISAs etc. My pension funds were dogs even though I did all that I could to avoid commission charges etc.
The employment income stopped a good while back, so now it's just a small pension, bank interest and a little rent (but I'm selling that one too).
I can't stand the strain of gambling in equities (except a stagging punt or two) and for the present am content to accept a guaranteed fall in the spending power of my capital owing to inflation.
Of course in the meantime the house in which I live, just by sitting there and keeping the rain off, earns more than most professionals.
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Plenty of good guidance above but DYOR - do your own research. This is not easy because you will encounter familiar research problems; not that there is not enough information but that there is too much, it is hard to locate and not in the exact form you want.
One key piece of information is particularly hard to find in advance - how long will you live? If you can't see further than 5 years ahead you should avoid shares, as you don't have enough time to ride out bad falls. Funds are safer, particularly those with a high proportion of fixed interest in their portfolios. Otherwise go for bonds for a percentage equal to your age. If, say, you are 75 years old, bonds should take 75% of your money. I would use the remaining 25% on other fixed interest investments such as preferences shares and, less directly, bond-heavy trusts. I am running short of time and this is why I am shifting over to fixed interest, not because of any threat posed by the market.
Some nice yields here but holders come last for compensation if the company crashes:
www.thisismoney.co.uk/money/markets/article-1583858/Permanent-bearing-shares-PIBS-rates-table.html
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Should I Sell My Shares - Or Keep Them? - Crankcase
