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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: TimbaBear who wrote (18912)	3/19/2004 8:18:44 AM
From: Dale Baker	Respond to of 78498

I follow the same policy as long as the stock being held isn't exceeding reasonable valuation multiples. I also avoid margin; if I needed cash for the new play I might sell a current play that is within 5% of "fair value" as I see it. Adding the new position diversifies the portfolio and lowers overall risk too.

To: TimbaBear who wrote (18912)	3/19/2004 12:51:19 PM
From: MCsweet	Respond to of 78498

TimbaBear, I think you hit the nail on the head. The suggestion of consider selling if you wouldn't be buying is a reality check --- to help you evaluate whether you should be taking profits on outlier securities in your portfolio. It is certainly not the only answer (or even the best answer), but it helps me sleep comfortably with my portfolio. Thanks MC

To: TimbaBear who wrote (18912)	3/19/2004 1:19:35 PM
From: - with a K	Respond to of 78498

Here's an idea about selling. Ask yourself if you didn't have a position would you be comfortable buying the security at these levels? If not, then you should think about selling at least some of your position (say perhaps 1/2). This system sometimes works for me as a reality check of sorts. However, there have been times when I have not been comfortable adding to a position but felt the time was not right to sell. I once heard Jim Cramer talk about this on his radio show. He would be in a losing position, agonizing over it as it crept down, losing sleep and full of doubt. His wife was the trader in his hedge fund and apparently much less emotional, a TA type. She would sell off his losing position when he went to the bathroom and when he would go ballistic would cooly say, "If you like it so much, buy it back." He said he never would, glad to be out of it. In effect she was asking the question for him by taking action. He also talks about the emotional reaction to a falling stock and compares it to buying a sweater on sale. He asks why do we think we've found a bargain when we see the sweater on sale and snap it up while conversely when we see a stock "on sale" we think it's damaged goods and don't buy? This kind of thinking applies to me sometimes when a stock drops after lots of DD and I'm reluctant to add to it because I conclude something must be wrong.