Sell Limit ...approach and rationale

[YellowSubmarine]

The market is expensive; and equities done well lately in spite of the war and inflation. I created a sell basis for my equities during this current environment. I am selling half of all my equities at a sell limit, GTC basis. I expect to reclaim most position after the midterm elections are determined, as warranted. Here's my approach this time around...and what do you think?
7.22% is my 15-year average portfolio gain after expenses
2.5% is my cost of living expenses
9.72% is the total gross return average for the past 15 years.
5.38% Current gain for 2026 to date, Net
1.5% Prorated cost of living, expenses 2026
6.88% Total return to date, Gross
2.84% deficiency, Balance 0f 2026 ( 9.72 - 6.88 = 2.84%). I am placing a sell limit for all equities in IRAs and HSAs, selling half of my positions, at closing price plus 2.84% based on 6/2/2026. This represents 33% of all equity positions. Although I have equity positions in a brokerage account and in a Professionally managed account, there will be no sales there but those accounts factor in and represent a portion of my equity positions. This will raise my overall cash position to 26% of my portfolio. I may be half right or half wrong with this approach; but I am not exposed to a total surprise (one way or the other). I already experienced four limit sales...with 50 or so to go. Input...feedback please.

 

[tizod]

I like the thinking, but I'd put the sells in at a higher limit, as 2.8 might be"daytrading" in todays environment, and this is not urgent. So I'd do limits higher and grab a gain, and/or add stop loss and cover the downside. Might want to look at the investment and guess the logical catch to the upside - like a med device stock +10%, but a CAG plus 0.5% (Id actually stop loss that)!

 

[YellowSubmarine]

I like the thinking, but I'd put the sells in at a higher limit, as 2.8 might be"daytrading" in todays environment, and this is not urgent. So I'd do limits higher and grab a gain, and/or add stop loss and cover the downside. Might want to look at the investment and guess the logical catch to the upside - like a med device stock +10%, but a CAG plus 0.5% (Id actually stop loss that)!

I do tweak the sell limit price when I am available and notice positive activity in sector or issue. The sell limits are a back stop (FOMO). Also this approach was formulated over the weekend and applying a 3.43% factor vs 2.8%. Thank you for the valuable insight.

 

[RetiredHappy]

Interesting way to look at it quantitatively. However market performance is not linear, as we know. I am already up by more than 12% YTD, including today's down market. Since we are buy and hold investors, we don't try to cash out of our positions when the market is up, or sell when it is down. Instead we are holding a little more cash as a way to hedge against the market.

 

[SecondCor521]

I agree the market is probably frothy. I checked my plan and it says to do nothing in this scenario, so I will do nothing.

I think it is possible you will lose out on further market gains in the near term. I understand this is a possibility that you likely discount currently. Sitting on cash and expecting a market downturn makes it comfortable to miss out on those gains, but you'd still be missing out.

I think the bigger concern is for your thesis about reentering the market in the fall. I see too many ways for this to go wrong: the most likely risk is a v-shaped recovery that you miss out on because you don't trust the upward trend for too long.

And then the longer term risk: you succeed this year and become convinced that you can read the tea leaves well enough to time the market, and continue to market time in future years. Statistically market timing is a losing game, so I don't play.

 

[YellowSubmarine]

I agree the market is probably frothy. I checked my plan and it says to do nothing in this scenario, so I will do nothing.

I think it is possible you will lose out on further market gains in the near term. I understand this is a possibility that you likely discount currently. Sitting on cash and expecting a market downturn makes it comfortable to miss out on those gains, but you'd still be missing out.

I think the bigger concern is for your thesis about reentering the market in the fall. I see too many ways for this to go wrong: the most likely risk is a v-shaped recovery that you miss out on because you don't trust the upward trend for too long.

And then the longer term risk: you succeed this year and become convinced that you can read the tea leaves well enough to time the market, and continue to market time in future years. Statistically market timing is a losing game, so I don't play.

I will continue with decent market exposure. Prior to plan, I was 8% cash (equity designated funds) ; if plan follows through, I will have 33% of my equity allocations in cash. Well, not exactly cash as I collect 3.5 -7% return on MM and JBBB. The feedback I received got me thinking to create buy limit sto recapture my previous "full" position...perhaps 7% below the sell target...too tight?

 

[Al18]

I don’t think 9.72% average return over the past 15 years is special. If you invested in a FBALX, an actively managed 60/40 fund 10 years ago, the average annual return is 12.17%.

 

[YellowSubmarine]

I don’t think 9.72% average return over the past 15 years is special. If you invested in a FBALX, an actively managed 60/40 fund 10 years ago, the average annual return is 12.17%.

fwiw My typical allocation during retirement was more heavy in bonds than equities (after 2008). My records go back for 36 years with average return after expenses of 11.55% (n=36). I am more conservative now as growth has not been a priority since 2011. Since 1989, I had four negative return years. I know many have done better and many done worse; and even more have never done investing at all.

 

[Al18]

Only about 15% of my investments are individual stocks. The remainder are stock funds and ETF’s. I’m a buy and hold investor - only selling to fund my retirement. I don’t worry what the market is doing.

 

[YellowSubmarine]

Only about 15% of my investments are individual stocks. The remainder are stock funds and ETF’s. I’m a buy and hold investor - only selling to fund my retirement. I don’t worry what the market is doing.

I treat the equity market more as a active sport vs a watching sport. My ballast, safe haven is the 44% bond allocation. The market has been a daily activity for many years (pre-internet). I monitor it, discuss it and study it...the nature of this beast. Recently someone on this forum commented that watching stocks is more interesting than watch players chase a ball...I concur (less football).

 

[Koolau]

I treat the equity market more as a active sport vs a watching sport. My ballast, safe haven is the 44% bond allocation. The market has been a daily activity for many years (pre-internet). I monitor it, discuss it and study it...the nature of this beast. Recently someone on this forum commented that watching stocks is more interesting than watch players chase a ball...I concur (less football).

Heh, heh, not a football fan, but I've proven to myself that I have no gift for buying/selling stocks. I admire those with the discipline. Carry on.

 

[YellowSubmarine]

Already buying back STK that was sold two days ago...11.6% net spread...Now to do the same on the other 50+ issues.

 

[OldShooter]

WADR, your post reminded me of something in my clips file: https://www.bogleheads.org/wiki/Taylor_Larimore's_market_timing_quotes

 

[YellowSubmarine]

WADR, your post reminded me of something in my clips file: https://www.bogleheads.org/wiki/Taylor_Larimore's_market_timing_quotes

I don't view it so much as "timing". Instead, I set a goal with justified rationales; and once reached I sell and appraise the relative market. I may or may not return to that equity, sector or allocation factor. In the interim, I park the proceeds in an income producing stream which compounds my returns. Just to sit in the market and take a day like this on the chin is less than ideal.

 

[NW-Bound]

Buying is easy. Selling is hard.

I remember reading the autobiography of John Neff (1931-2019). He ran Vanguard Windsor Fund from 1964 to 1995. I remember he wrote that he never tried to sell a stock at its peak. He said that he was not that smart, and was happy that he had a good return. And he said it was OK to leave something for the next buyer.

PS. John Neff's return on the Windsor Fund from 1964 to 1995 was 13.7% annualized. I looked up the S&P return during this period as 10.83% annualized. Compounded over 31 years, the difference became 2.2X.

 

[YellowSubmarine]

Buying is easy. Selling is hard.

I remember reading the autobiography of John Neff (1931-2019). He ran Vanguard Windsor Fund from 1964 to 1995. I remember he wrote that he never tried to sell a stock at its peak. He said that he was not that smart, and was happy that he had a good return. And he said it was OK to leave something for the next buyer.

PS. John Neff's return on the Windsor Fund from 1964 to 1995 was 13.7% annualized. I looked up the S&P return during this period as 10.83% annualized. Compounded over 31 years, the difference became 2.2X.

Especially in frothy markets, that's why I set target sell pricing. After the dust is settled, I recalibrate, tweak my allocations. In many cases, I seldom sell out of a position in this paradigm. It is also a time for dumping/house clean the losers.

P.S. My 36-year return average is 11.55%. The return was brought down after retirement (2012) with heavy income and bond focus....the last 15-year return is 7.22% (after expenses). The portfolio continues to grow; but not swinging for the fences either.

fwiw...Fido shows I am down 1.24% after the June 5 set back. Whereas my Schwab account that has no individual bonds is down 1.93%.

 

[FREE866]

The market is expensive; and equities done well lately in spite of the war and inflation. I created a sell basis for my equities during this current environment. I am selling half of all my equities at a sell limit, GTC basis. I expect to reclaim most position after the midterm elections are determined, as warranted. Here's my approach this time around...and what do you think?
7.22% is my 15-year average portfolio gain after expenses
2.5% is my cost of living expenses
9.72% is the total gross return average for the past 15 years.
5.38% Current gain for 2026 to date, Net
1.5% Prorated cost of living, expenses 2026
6.88% Total return to date, Gross
2.84% deficiency, Balance 0f 2026 ( 9.72 - 6.88 = 2.84%). I am placing a sell limit for all equities in IRAs and HSAs, selling half of my positions, at closing price plus 2.84% based on 6/2/2026. This represents 33% of all equity positions. Although I have equity positions in a brokerage account and in a Professionally managed account, there will be no sales there but those accounts factor in and represent a portion of my equity positions. This will raise my overall cash position to 26% of my portfolio. I may be half right or half wrong with this approach; but I am not exposed to a total surprise (one way or the other). I already experienced four limit sales...with 50 or so to go. Input...feedback please.

Everyone does what they want obviously, but this sounds like so much work to me. Selling half positions, GTC orders, professionally managed accounts, making adjustments based on elections, etc

I like simple--plain vanilla stock index ETFs, few years of expenses in bonds/cash. The fewer decisions I have to make the better I'm off mentally and financially.

 

[Koolau]

Someone here or on a similar thread mentioned "hobby." I can see that though it's not for me. I'm guessing those good at it make money on their hobby.

 

[YellowSubmarine]

Everyone does what they want obviously, but this sounds like so much work to me. Selling half positions, GTC orders, professionally managed accounts, making adjustments based on elections, etc

I like simple--plain vanilla stock index ETFs, few years of expenses in bonds/cash. The fewer decisions I have to make the better I'm off mentally and financially.

Simple has always been my goal. But, the mind is always active and it makes things complicated. I consider an active mind as healthy mind.
Logistics, I use a spreadsheet and a few basic formulas for percentage integration and sell points. All of this selling is in IRAs and HSA. Brokerage and Pro accounts are untouched by me. It does involve 63 position subject to selling; but once the formulas are applied and the sell/limit orders are placed, it's in auto-pilot. This total process took four hours. So far this week alone six positions sold and this raised my equity cash to 13% from 8. If I had better things to entertain myself with, I might not be so market active.
fwiw...Between all accounts at two brokerage houses, I am down 1.33% from my 6/3/26 ATH. Currently, I feel better off than the market indices.

 

[FREE866]

Simple has always been my goal. But, the mind is always active and it makes things complicated. I consider an active mind as healthy mind.
Logistics, I use a spreadsheet and a few basic formulas for percentage integration and sell points. All of this selling is in IRAs and HSA. Brokerage and Pro accounts are untouched by me. It does involve 63 position subject to selling; but once the formulas are applied and the sell/limit orders are placed, it's in auto-pilot. This total process took four hours. So far this week alone six positions sold and this raised my equity cash to 13% from 8. If I had better things to entertain myself with, I might not be so market active.
fwiw...Between all accounts at two brokerage houses, I am down 1.33% from my 6/3/26 ATH. Currently, I feel better off than the market indices.

63 positions!?!?!?!

Not laughing at you but that would just destroy my serenity!

But again, we all have our own path!!

 

[SecondCor521]

Someone here or on a similar thread mentioned "hobby." I can see that though it's not for me. I'm guessing those good at it make money on their hobby.

Active investors as a group, over time, after taxes and other expenses, and on a risk-adjusted basis, make less than passive investors. At least that's roughly what John Bogle asserts, and I agree with him.

Decent active investors probably still make money, just less than the relevant markets. So an active investor can truthfully say "I'm an active investor and I make money".

They're still probably spending their time and effort to end up less wealthy. So I would characterize it as a money losing hobby, not a money making hobby.

Active investors tend to, in my experience:

1. Note their subset of successes. For example, noting that they did well investing in stock X and ignoring their overall portfolio. Or noting that they did better than the market this week and ignoring their overall performance over time.

2. Not accurately compare their performance to the relevant market indexes after taxes and adjusting for risk. For a decade I have occasionally asked active investors for this comparison over a five year period (I've been investing for 40 years so five years doesn't seem like that long). I've never had an active investor do so correctly (i.e. do the math properly) and successfully (i.e. actually beat their benchmark over five years).

 

[YellowSubmarine]

Active investors as a group, over time, after taxes and other expenses, and on a risk-adjusted basis, make less than passive investors. At least that's roughly what John Bogle asserts, and I agree with him.

Decent active investors probably still make money, just less than the relevant markets. So an active investor can truthfully say "I'm an active investor and I make money".

They're still probably spending their time and effort to end up less wealthy. So I would characterize it as a money losing hobby, not a money making hobby.

Active investors tend to, in my experience:

1. Note their subset of successes. For example, noting that they did well investing in stock X and ignoring their overall portfolio. Or noting that they did better than the market this week and ignoring their overall performance over time.

2. Not accurately compare their performance to the relevant market indexes after taxes and adjusting for risk. For a decade I have occasionally asked active investors for this comparison over a five year period (I've been investing for 40 years so five years doesn't seem like that long). I've never had an active investor do so correctly (i.e. do the math properly) and successfully (i.e. actually beat their benchmark over five years).

What is say may be true for some investors. I am a near 50/50 equity : bond investor especially since 2008. My focus point is not beating the index but the realization of having a higher NAV and the year's end compared to last year -after all expenses. As you can see from my NAV performance for 36 year, the average per year is >11.5%. There was four negative years included. I usually beat the bond indices but lag the SP500.

It's important not to fool yourself with performance; so if anything, I underrate my performance. Besides, it's hard to shake the losers as they leave a bigger, lasting impact vs winners.
(1989 - 2025)

 

[SecondCor521]

What is say may be true for some investors. I am a near 50/50 equity : bond investor especially since 2008. My focus point is not beating the index but the realization of having a higher NAV and the year's end compared to last year -after all expenses. As you can see from my NAV performance for 36 year, the average per year is >11.5%. There was four negative years included. I usually beat the bond indices but lag the SP500.

It's important not to fool yourself with performance; so if anything, I underrate my performance. Besides, it's hard to shake the losers as they leave a bigger, lasting impact vs winners.
(1989 - 2025)
View attachment 64110

Sure, makes total sense so far.

If, in fact, you were 50/50 all the time over that 36 year period, then my question would become how did your performance compare to a 50/50 ratio of the relevant bond and stock indices?

But you said you changed your investments in the 2008 time frame. So a more accurate comparison would be 50/50 from 2008 to now, and some other appropriate ratio for the earlier years.

This is more work to do than most people seem to want to do. Honestly, it's part of why I'm not an active investor myself.

...

Looking at your stated numbers more closely, something doesn't add up to me. I suspect you are either using NAV as a term to describe your portfolio value (the two aren't the same, but that's OK), or you're ignoring the effect of contributions to your portfolio over that 36 year period when calculating your rate of return. Possibly both.

 

[YellowSubmarine]

Sure, makes total sense so far.

If, in fact, you were 50/50 all the time over that 36 year period, then my question would become how did your performance compare to a 50/50 ratio of the relevant bond and stock indices?

But you said you changed your investments in the 2008 time frame. So a more accurate comparison would be 50/50 from 2008 to now, and some other appropriate ratio for the earlier years.

This is more work to do than most people seem to want to do. Honestly, it's part of why I'm not an active investor myself.

...

Looking at your stated numbers more closely, something doesn't add up to me. I suspect you are either using NAV as a term to describe your portfolio value (the two aren't the same, but that's OK), or you're ignoring the effect of contributions to your portfolio over that 36 year period when calculating your rate of return. Possibly both.

As I mentioned, this is the value of my accounts, collectively, at the end of the calendar year. My goal is to have more this year than last. Whether I contributed or paid my expenses, the NAV is summated at year's end and my results are published on that graph. This is what's important to me. In light of your inquiry, Fido and Schwab indeed provide comps of my performance vs indices. As I said, I usually beat the bonds and come up short on the SP500. According to Fido my 10y return average is 9.x%. (fyi, my 15 year retirement average is 7.22% per my system of NAV change). Also, I do this system for my convenience for the past 36 years or so, and I wish to keep this standardization procedure in the future as these reference points are most valuable. I am in no contest against fellow investors nor indices. I just focus on positive NAV changes on a yearly basis. It's worked well for me...not great but well. Also...that's why I turned over a portion of my portfolio (10%) for the pros to manage. There, the numbers matter relative to indices. They are up 11% in the past 9 months as of today.