Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
painful...
Old 06-19-2010, 09:29 AM   #1
Recycles dryer sheets
 
Join Date: Jul 2006
Posts: 214
painful...

this correction is really painful. here is my story. two main positions:
a, 2007 bot 45k avg @1.2, peak 2.95 2008, low .23 2009, peak 3.25 2010, now 2.2

b, 2008 bot 83k avg@.46, low .03 2009, peak 4.2 2010, now 1.9

still hold it, no ONE share sold. i bumped my head against wall.

here is questions: what's you guys way to take profit? please share...

thx,
__________________

__________________
semtex is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-19-2010, 10:25 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,620
What correction are you talking about? Bonds are up this year. Stocks are up since early February. We just had a 10% run-up in the last 2 weeks. Total portfolio is up YTD.

There is a very nice rule on when to rebalance your asset alloction:
For asset classes that have a 20% or more weight in your portfolio (i.e. bonds), rebalance when they are up or down more than 5% of your portfolio value.

For asset classes that have less than a 20% weight in your portfolio (i.e. REITs), rebalance when they are up or down more than 25% of their weight.

This is sometimes called the 5/25 rebalancing rule and is most often associated with Larry Swedroe.

Small caps were up about 20% in April, so that's when I rebalanced (did not sell all positions, but just enough to get back into balance). REITs were up about 15% in April as well, so that meant sell some. Two weeks ago, I bought back into REITs. The rules are simple, unemotional, mechanical, and very helpful.
__________________

__________________
LOL! is offline   Reply With Quote
Old 06-19-2010, 10:27 AM   #3
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
My guess is that most folks here "take profits" by periodically rebalancing their portfolio according to some predefined (i.e. non-emotional) strategy. That "takes profits" in that it sells some of what has recently outperformed ("sell high") and buys what is currently "cheaper" because of recent underperformance ("buy low").
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 06-19-2010, 10:39 AM   #4
Recycles dryer sheets
 
Join Date: Jul 2006
Posts: 214
do not know bonds. only equity, always 100%. and penny stocks only
__________________
semtex is offline   Reply With Quote
Old 06-19-2010, 10:42 AM   #5
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by semtex View Post
do not know bonds. only equity, always 100%. and penny stocks only
This pretty much guarantees that corrections *will* always be painful....
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 06-19-2010, 10:42 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,620
LOL! I applaud you for digging your own grave.
__________________
LOL! is offline   Reply With Quote
Old 06-19-2010, 10:44 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,427
You said the above are your two main stock positions, but did not say how much they are in terms of percentage of portfolio.

I myself have no stock position that is more than 5% of portfolio. I do a pretty lousy job of "selling high" and rarely hit the real top. I rode a few down to zero (bankrupt) too. Still, I survived and beat holding the S&P 500. Overall, do I beat Uncle Mick's favorite pffttt Wellesley? Some years I do, some I don't.

But back on your question, usually when I am not too greedy and not trying to time the exact top to sell really really high, I tend to do a lot better.

PS. I hold no penny stocks. At least they weren't when I first bought them!
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is online now   Reply With Quote
Old 06-19-2010, 10:44 AM   #8
Thinks s/he gets paid by the post
 
Join Date: Jul 2003
Location: Pasadena CA
Posts: 2,695
I don't 'take profits' in the classical sense. I am in withdrawal phase and selling of some assets to cover costs not covered by our pensions. In 2009 this came from selling UST stock when it was bought out by MO, 2010 is covered by some IRA withdrawals and selling off gold coins. Also will be selling ibonds but that is to cover sons college costs.2011 is covered by pensions and a stock sale of BWA (sold this year and set funds aside for 2011). So I look at our pension and our 'portfolio' of taxable, tax deferred and tax free accounts and sell off what looks appropriate at the time to keep us in the 25% tax bracket.
__________________
T.S. Eliot:
Old men ought to be explorers
yakers is offline   Reply With Quote
Old 06-19-2010, 10:45 AM   #9
Recycles dryer sheets
 
Join Date: Jul 2006
Posts: 214
what's that about? we each have one, sooner or later
__________________
semtex is offline   Reply With Quote
Old 06-19-2010, 11:04 AM   #10
Recycles dryer sheets
 
Join Date: Jul 2006
Posts: 214
Now my way to take profit: TA(new high, price/vol) FA(fair value, like PE 10 ~ 15). But not work well. Many times after I sold off, stocks keep the up trend. Worst case, Boom, sold 2.2, then it up to 70+. Only good thing is I did not bet big on it.
__________________
semtex is offline   Reply With Quote
Old 06-19-2010, 11:55 AM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by semtex View Post
here is questions: what's you guys way to take profit? please share...

thx,
When I buy individual equities or bonds, I have a "fair value" in mind at whick point I will sell. Sometimes this varies with the environment, such as my holding in CHK may have a sell point that varies with natural gas prices. Bonds are usually easy: buy at a discount and sell when they hit par/call price/spread-based target. And if you do not sell at least they eventually mature and solve the sell issue for you. Equities require more discipline and I think it is crucial to have a sell target in mind when you buy. The sell target might later get adjusted if the fundamentals change, but you need to have one.

But having a valuation target is important because otherwise you may hold through the leap and watch it go back to bing a bargain again. I am still working on improving my sell discipline, but I am getting better. I bought AIZ in late 2008 at 13 bucks and change with the idea that it was really worh triple that. The stock has been getting really close to my sell target without a significant change in the fundamentals, so on Thursday I sold june 37.50 calls on a bit over half my position for a buck a share. I find that covered call writing that gets you (all-in) your target sell price helps a lot with sell discipline.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 06-19-2010, 12:11 PM   #12
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Quote:
Originally Posted by LOL! View Post
There is a very nice rule on when to rebalance your asset alloction:
For asset classes that have a 20% or more weight in your portfolio (i.e. bonds), rebalance when they are up or down more than 5% of your portfolio value.

For asset classes that have less than a 20% weight in your portfolio (i.e. REITs), rebalance when they are up or down more than 25% of their weight.

This is sometimes called the 5/25 rebalancing rule and is most often associated with Larry Swedroe.
That is an easy rule of thumb and sounds rational. Do you know if it has ever been tested or back-tested?

My sense is that any method that does not depend on speculation, but relies on objective, non-manipulable variables would be equivalent. (such as rebalancing every two ears on a fixed date, every election year, etc.).
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Old 06-19-2010, 12:15 PM   #13
Recycles dryer sheets
 
Join Date: Jul 2006
Posts: 214
I become kind of sloppy when one holding got big up, for example, 2 or 3 bagger, for I know hard to lose. but this time really hurts me. the 2 mainly are in the Roths.
__________________
semtex is offline   Reply With Quote
Old 06-19-2010, 12:18 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
dex's Avatar
 
Join Date: Oct 2003
Posts: 5,105
Quote:
Originally Posted by semtex View Post
t
here is questions: what's you guys way to take profit?
Maybe when you do take a profit you can buy some capital letters.
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
dex is offline   Reply With Quote
Old 06-19-2010, 12:29 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,620
Quote:
Originally Posted by Rich_in_Tampa View Post
That is an easy rule of thumb and sounds rational. Do you know if it has ever been tested or back-tested?

My sense is that any method that does not depend on speculation, but relies on objective, non-manipulable variables would be equivalent. (such as rebalancing every two ears on a fixed date, every election year, etc.).
Lots of studies about rebalancing with various (but mostly similar) conclusions:
Determining the Optimal Rebalancing Frequency - WiserAdvisor.com University

http://web.archive.org/web/200502132...s/9203mono.pdf

See also (this is what I use):
http://www.tdainstitutional.com/pdf/..._Daryanani.pdf
__________________
LOL! is offline   Reply With Quote
Old 06-19-2010, 12:50 PM   #16
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Quote:
Originally Posted by LOL! View Post
Lots of studies about rebalancing with various (but mostly similar) conclusions:
Determining the Optimal Rebalancing Frequency - WiserAdvisor.com University
Thanks. I like their conclusion:

Quote:
Conclusion
The analysis conducted for this research coincides with other industry research suggesting that the method and frequency of rebalancing is insignificant, as long as an investor employs a rebalancing discipline. Contrary to popular belief, rebalancing does not appear to enhance investment returns. However, it has proven to significantly reduce volatility. This reduction in volatility has tended to occur in down markets.

We believe the most optimal rebalancing discipline, after considering taxes and transaction costs, is a 5 percent trigger. Based on our study this method has proven to perform in line with other methods and its smaller number of rebalancing instances (as compared with a quarterly or annual rebalancing method) will significantly reduce transaction costs and taxes. When considering taxes, a quarterly or annual rebalancing method is more apt to recognize short-term gains, a more costly taxable gain, than a 5 percent rebalancing trigger, which is less likely to recognize short-term gains. The negative side of a 5 percent rebalancing frequency is that it is not as static or automated and places greater responsibility on the investor and their financial advisor to periodically review their asset allocation to ensure a trigger has not been violated...
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Old 06-19-2010, 01:14 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,282
I'm really confused. You have two holdings up almost double and quadruple in a couple years, and you feel 'pain'?

And you are asking US for advice??

Oh well, my 2 cents anyhow: When an investment does significantly better (say 2x) than the S&P500 over the same time-frame, I take my profits. I probably got lucky, so why risk it?

Two more pennies, just IMO, but I fail to see how anything qualifies as 'fair value' other than the current bid/ask price. That's where the rubber meets the road. My Dad used to say something like that when someone would tell them how much they put into a car or whatever, so it was 'worth X amount'. He would say, "It's only worth what you can get someone to pay you for it".

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 06-19-2010, 01:16 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
easysurfer's Avatar
 
Join Date: Jun 2008
Posts: 7,890
I rebalance usually once a year, unless things get out of whack (drift) too much before. First, I rebalance within IRAs (have IRAs in each asset class) to minimize taxable events, then later rebalance outside of IRAs if needed.
__________________
Have you ever seen a headstone with these words
"If only I had spent more time at work" ... from "Busy Man" sung by Billy Ray Cyrus
easysurfer is offline   Reply With Quote
Old 06-19-2010, 01:31 PM   #19
Recycles dryer sheets
 
Join Date: Jul 2006
Posts: 214
Quote:
Originally Posted by ERD50 View Post

Two more pennies, just IMO, but I fail to see how anything qualifies as 'fair value' other than the current bid/ask price.
-ERD50
if you are an efficiency/random walk believer, we live in the parallel space

double/tripple is not a rare thing in the penny world. see my position B, it down to 3 cents then up to 4.2 bucks. I have to lose 90+% before the 9+ times up.
__________________
semtex is offline   Reply With Quote
Old 06-19-2010, 01:35 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by ERD50 View Post
Two more pennies, just IMO, but I fail to see how anything qualifies as 'fair value' other than the current bid/ask price. That's where the rubber meets the road. My Dad used to say something like that when someone would tell them how much they put into a car or whatever, so it was 'worth X amount'. He would say, "It's only worth what you can get someone to pay you for it".

-ERD50
You are entitled to your opinon. Personally, I am generally a deep value investor and willing to do significant analytical work to figure out companies/situtations that may be small cap with little or no institutional following. That means I am trying to play in situations where there is market inefficiency and I can buy assets for a significant discount of what a more efficient market might value them. So I will typically come up what I think an "efficient market" valuation would be before I buy anything and use that (possibly with a haircut) as what I think the asset is worth.
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
retirement was painful WarrantiesFurLess Hi, I am... 28 04-23-2008 01:09 PM
Painful Diversification yakers FIRE and Money 20 08-23-2005 11:58 AM

 

 
All times are GMT -6. The time now is 04:01 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.