Click herJohn Neff is one of the greatest investors of the twentieth century; a value investor with a particular emphasis on low price earnings ratios. He acknowledged that deciding when to sell is the toughest investment decision. Unfortunately it is far too easy to fall in love with the shares in your portfolio.
You must remember that your shares represent a business and if the underlying business is not performing now, and you see no upward turn on the near horizon, you must part with them.
All Neff’s shares were for sale, yet he was not averse to holding some for three to five years. However, at times if a share was not living up to expectations it may only be held for only a month.
Thus, a share may be sold if the fundamentals of the business have changed (e.g. strategic position or management) since the purchase or a mistake in the original analysis is revealed. Thus it’s important to regularly update your analysis so that each share in the portfolio has a clearly visualized potential for a rising share price.
There are two major hurdles an investor must clear when making the decision to sell.
I'm a full-time investor running my portfolio. I invest other people's money into the same shares I hold under the Managed Portfolio Service at Henry Spain. Each of my client's individual accounts is invested in roughly the same proportions as my "Model Portfolio" for which we charge 1.2% + VAT per year. If you would like to join us contact Jackie.Tran@henryspain.co.uk
investing is about making the right decisions, not many decisions.