JS.... please read my disclaimer at the bottom re advice...... but I will give you my opinion...
qu 1. Technically I guess you shouldnt, because if they are a dimwit and you arent, then it stands to reason that you can get a better return than they can. My fault with ALF is that it WAS performing well, a long only fund and if I remember correctly ALL Australian stocks. Then some bright spark came along and said we will indtroduce some international stocks into the portfolio and then it morphed into a long short fund. My fault is that I assumed that the fund would be run as before, and I took my eye off the ball and I had confidence in the fund managers (which was obviously misplaced) and before you know it , it was where you see it today. My conundrum is that it is so obviously a non performer that something or someone is bound to get the sh*ts, just like you, and make something happen. If you go back and read my previous posts on ALF, we have discussed a number of options. I think Geoff Wilson has a significant holding and I think it will be a matter of time before he too makes an investment decision. $280 mill bucks just sitting there doing nothing.
The bottom line re losses is despite madamswers opinion is to set yourself a stop loss of say ? % and if they fall below that, sell. Cut you lossses because as “they” say; sometimes its not how much you make on a certain stock, its just how little you lose on the losers”. ALF owes me $1.17..so Im underwater significantly given the potential of ALF to get there !
The second Qu is much easier. Generally, let your profits run. BUT if a stock in your portfolio makes a significant change to management, ie resignations, or to its profit figures, or to its business model, then keep a close watch because as they say, the first bit of bad news is rarely the last. CSL is a good example of letting your profits run. i will give you 2 examples to support the discussion. I bought GXL Greencross at $4.44. I read somewhere (possibly from Steve Johnson) that they had treated a writedown in a certain unusual way. I didnt like that so I sold at $4.46 shortly after I bought them. I think they are now mid $3.60’s.
The second is an example of me NOT letting my profits run. Well 2, I sold some RHC at $17 when Stock Doctor stated they were overvalued... now a bit over $50.00. The other was BVS Bravura Solutions which I bought after listening to a presenter on BHS. Buy hold. Sell. Bought 5000 of them at something like $1.60. A few weeks later they had another 2 brokers on BHS who stated that BVS wouldnt go anywhere just supplying “back office systems” and both recommended a sell. I sold at about $1.76. BVS is now approx $4.20 and I will remember and hate those 2 brokers till the day I die !
In summary, let your profits run, but have a stop loss to lock in your gains if there is a fall. You could for arguements sake, set that stop loss at 10% below the highest recent point in your share price. But that depends on the size of the company, volatility of the ahare price and a number of other factors.
Sometimes the sleep at night test, is the best indicator.
Sorry for your loss, i hope it didnt overly adversley affect your investment journey... best wishes PJ
Expand
