Join Today
Results 1 to 5 of 5
  1. #1

    When to trim a stock position?

    What are some rules of thumb that you use for trimming a stock position

  2. #2
    In my income portfolio I look at CY and ROI. Stocks with CY below 3 and ROI near 8 get on my potential replacment list. I look for a 3.5% CY replacement.

    A current potential candidate for replacment is FAST which I have held for 30 months with CY 2.8 and 30 month ROI of 8.46.
    Of course, final replacment decision rests on taxability of sale and confidence in replacement.
    I will also sell or trim when outlook dims for a holding. Unfortunatly, when selling based on outlook I sometimes carry more cash than I want waiting to find a suitable replacment.

  3. #3
    Only one response?

  4. #4
    It seems to me that the goals of the portfolio will determine this strategy, RPKRPI. I think the decision to sell is one of the most difficult decision we have to make.

    In my case, FWIW, i would not typically sell any part of a position unless the stock is no longer filling the role i need it to play. This can happen if:

    - the dividend yield has dropped due to dividend cut. In this case i try to understand the reason for the cut. For example, when PFE cuts its dividend to acquire Wyeth, i am not concerned. But when FTR cuts its dividend because business performance is bad, i am concerned.

    - the quality of the company has diminished. This can happen, for instance, when T takes on too much debt, or when GE fails to remove a poor CEO for too long. Not that these things would ever happen :-)

    - some other company can fill the role better. For instance, I may be happy to see the increased dividend yield of AMGN and decide to replace ABBV with AMGN.
    - the world changes. Sometimes i think about the role oil companies (as distinct from energy companies) will play in my portfolio.

    i do not worry too much about a strict adherence to allocation strategy - this depends on the company. For instance, if i had a allocation strategy saying that no company would deliver more than 5% of my dividend income, i would not be unhappy if JNJ delivered 10% of my dividend income, although i would be unhappy if KSS delivered 10% of my dividend income. Obviously this is a personal perspective.
    Interesting and challenging question.

  5. #5
    I bought HD summer 1986 200shrs then added many more in all my accts. @ one time had 16k shrs. couldn't take the big loses on dn. swings[1st. shrs. @ 35c ea.] now 162$ still own 3700shrs =1100per mo. divvy. also bought SCHW @ 45c shr. in early 90's still own 14900 shrs. owned MAR from early 80's & sold early in 2008 & never went back although it came back so diversified all $$$ into CEF's & PIMCO [ivacsyn] funds & it's much easier.


Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts