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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (36378)	1/6/2010 12:02:55 PM
From: E_K_S	Read Replies (2) of 78714

Portfolio Turnover Rate - Hi Paul - I wondering what your average portfolio turnover rate is. I am finding it is much harder to sell or peel off shares when a position becomes fairly valued or over valued. Many times I tend to hold on to the position especially if I was able to buy in at a good under valued price and the company continues to perform well and pays a market rate dividend. Some sectors I am quick to sell out as there is generally a better entry point in the future. My portfolio turnover rate might be around 6-8 years. I continue to hold a lot of my integrated oil stocks and natural resource stocks that I have owned and accumulated over 20 years. I find that a turnaround "Value" proposition might take a new management 24-36 months to turn around. Therefore, the undervalued stock could take as long as three years to become full valued again. During the last bubble crash 2000-2002, I picked up some large positions that I continue to hold (have peeled off shares over the years) which still may be undervalued. For example I bought GLW at prices between $5.00/share-$7.50/share and believe this stock could be worth $32.00/share based on their different growing business segments. My question concerns many of my recent buys in the utility sector which I have accumulated in the last 18 months. I was able to accumulate a pretty large position in a basket of utility companies with good dividend paying history. Many are up over 30% from my buy in prices. If I peel off shares and take the tax bite, I loose the dividend income and more importantly there are not other investments where I can redeploy the capital that provides me the same risk/reward profile. Therefore, I am tempted to continue to hold and only peel off shares as I find other value opportunities. You have mentioned your strategy of comparing alternative investments and using the 'relative dividend yield" model (discussed by you on the Dividend Investment for Retirement thread Message 26223193 ). Identifying and buying great undervalued plays is the easy part for me, but implementing a selling strategy (all or partial sells) is much more difficult especially when comparing future alternative investment opportunities. A long time mentor for me was Sir John Templeton who stated that "...always take profits when expectations and valuations are high, no matter where the "herd" may be thundering....". Reduce risk as values rise. Every investor should be wise enough to take what the market offers him and limit risk while participating on the upside. A fresh start Commentary: Investing lessons for January and beyond marketwatch.com So, have you discovered the "magic bullet" for harvesting your gains? EKS

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