Saturday, 27 November 2010

The Anxiety and Joy of Selling

It is not possible to sell at the absolute top or to buy at the absolute bottom of the price fluctuations of your stock.  Therefore, do not focus on timing your selling or buying at the absolute extremes of price fluctuations.  Be content that you have sold close to the peak and that you have bought close to the bottom of the price fluctuations.

One of my stock has moved upwards, very much higher than the fair value that I give to it.  It's PE has now exceeded 1.5X its signature PE, granted that its signature PE was a single digit one.  There was no deterioration in its fundamentals.  Its recent quarterly report did not report or suggest any dramatic improvement in its fundamentals.  The price of this stock has climbed with intermittent periods of small corrections over a very short time of less than a month.  This counter has given dividend yearly and at this present high price, the yield is rather low.   I sold off half of my stocks in this counter locking in a very good substantial profit. The other half will be sold gradually should the price continues to move upwards, deteriorating its 'upside potential to its downside risk ratio'.

As the remaining shares are now held virtually cost free, this investment operation is positive NOW and will always be positive in the FUTURE.


The Anxiety of Selling

No comments: