Ron: when to sell: We all sell too early in a bull market don't we?
I've made 30 sell decisions since mid '95. In 22 instances, the stock has continued to rise. In some of these cases a loss or small gain, coulda shoulda and didint become a good percentage gain - if I'da stuck with it.
Some stocks I own are value plays -- they should be sold when fair value is reached, not before. I try to plan that when I find something that's a better value than something I already own - and I am always finding something better than something I already own -g- - I have a way to avoid playing switcheroo. For others who like to dance like this, it may work, but for me- I allow so that I won't have to be jerked out of something I already have (buyer's remorse?) and into my latest find.
Growth stocks are tough to actually sell. I'll buy on dips, so when the growth actually does stop, I get caught in the downdraft. I always figure I can tell when growth is slowing , but in reality I don't or can't (maybe a function of portfolio size and/or my lack of attention to heavy analyses). Sometimes I just think the price is too far out of line. Result is usually an emotional sell for me. Facing that now with a large position in BMY.
Dividend plays are easier. I use a model based on dividend yield relative to S&P 500 or, like DIPY, monitor for continuous yearly increases. Problem for me here is the lack of capital appreciation or price action (sometimes)is boring, and I lose patience before I reach the well-defined price target. (So I build into my portfolio and managment structure ways to circumvent/overcome the boredom. Sometimes this works.)
In general I like now to sell in partial positions (even for value stocks when they hit "full value") It's something about mostly- 22/30 -being wrong about selling (or if not wrong... too soon)and the bull market.
Specifically, regarding WBB, it's growing its revs, I think the demand is there for future sales and book value is steadily increasing (although earnings are erratic). I bet that at some point in the next two years, the stock will once again - as it occasionally has done before - sell for 1.5x its BV which will be about 18.00 or more. I intend to hold the stock until it reaches $27. I am surprised the stock is rising -- I would expect it to fall or stay where it is. Analysts have projected difficult sales comparisons/lower earnings for '98. I think the stock will drop to 18 (from about 21) before it hits 27. Commonsense might say then... take profits now, buy back in at 18. The thing is... I bet that it will hit 27, but I don't know that it will go to 18 or that I would buy back at 18. It's like this... buy a bargain when it's a bargain and sell it when it becomes fairly valued. For this kind of play it's not buy, sell for 3 points, move on. You see that I miss a ton of good stocks, so when I find something that I can evaluate or at least believe in, I want to stick with it for the full term. That's what value investing is about. Not that I necessarily can follow my own rules...I surely succumb to temptation too - but it's what I am aiming to do... at least for WBB. And now that I've posted about it, I'll probably be shamed into being stuck with it for the duration -g-. Paul |
