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

To: Jurgis Bekepuris who wrote (28422)	10/5/2007 11:47:13 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78700

I'll comment on this: "Stubs are nice, but they don't solve the problem. Assuming you leave 1/10th of a position as a stub, even if stock doubles, you get only 1/10=10% gain from original position. Even if it triples, you get 1/10*2= 20% gain. These may be OK, but you have to keep eye on the stub, decide when to sell it - which is in itself very hard, since you already sold the original stock as overvalued - etc. Too much trouble. BTW, realistically if stock just goes up 30% or 50%, you get only 3-5% additional return if you manage to sell the stub at the top..." It's both psychological and financial. Yes, you get a smaller gain from your old position but what about looking at it from any new investments? You sell $5K basis of stock that's worth $10K, and you discard $9k but keep $1k. That $1k turns into $2k (if stock doubles say). If you reinvest the $9k you only better hope that that can do as well (9K-->18K). You keep enough of these stubs $1-->2, you're going to do very okay. Imo. And Yahoo doesn't make the tracking that difficult. Darn, I really am forced now to bring up AAPL as an example. Sorry, Madharry, others. But really, in at 9 or something and holding a stub up through $150+...geez, that's more paper profit from that stub than selling the whole rest of the thing at lower $20, $30, other level. Psychological: If somebody whines about misses, sells-to-soon, etc. they become subject to responses (by me, anyway -g-) for just selling out their entire position. Stocks don't always move from undervalued to only fairly valued. They sometimes move to beyond fairly valued. Okay to take profits at fair valued, but if somebody is going to sadly and regrettably note here that the stock has gone past fair to full and then to overvalued, then that person becomes subject to comments that I have regarding subs. Namely, you'd feel a lot better if you had held some stock back some to see what happens. Jmo, of course just based on MY experience. Others may naturally see it quite differently.