mardi 11 juin 2019

To keep or to sell

I'm pretty tempted to sell a part of what I own and wait for a better moment to come back.

I'm pretty tempted, even if all the so-called intelligent investors would say that it's not a good idea. 

They'd probably serve me the usual sentences. I've read them all over the last 10 years:

1- You should always stay invested. Ideally, 100% invested;
2- You shouldn't try to time the market;
3- Never sell a good asset;
4- Sell only when a good asset looks way overvalued;
5- etc…

My favorite sentence is the fifth one. Yeah, "etc" was a lot of food for thoughts for me. So open to interpretation. 

Today, I noticed how much I've beaten the index so far in 2019. My 22% performance so far is way better than the very respectable 13% of the S&P/TSX. 

Any annual performance over 20% represents a great year. What could I wait for, for the rest of 2019? An additionnal 10%? I'm too realistic to aim for that. Better case scenario, in my opinion, I'd get another 5%. And the realistic scenario is that the market could easily drop by 10% in the coming months, because it always happens, every year.

It's always a question of  historical means. With a performance of 13%, the market has done better than it's historical annual mean which is a little less than 10% per year for the last 60 years. But not much more. However, there's still 6 months and a half to go in 2019. 

And every question about investment is always a matter of proportion. To like a specific stock is sometimes OK as long as it's not a big position. And to have only 1% of your portfolio with a super stock is not good either. Same for cash. 

I'll never have a portfolio of 50% cash. The PE of the market would have to be very very high for me to have that much cash on hand. Currently, I'm 10% cash. I think I could get to 15-20% and the moment. With a portfolio made of 80% stocks, you can still benefit from what happens on the market. 

That's it. The post is written and I still don't know what i'm gonna do. I'll surely buy nothing. But I don't know if I'll sell something. There's always some spontaneity even if I write big posts about reflexion. Which doesn't always guide my actions. 

2 commentaires:

  1. I usually partially sell shares of a company when the proportion in my portfolio exceeds 10%, no mather if the stock is overpriced or not.
    But that does not mean that re-invest that money immediately.

  2. 10% is usually the limit of a position, for many people.