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When to sell ?

@BaluBalu : I hope you don't mind that I started this discussion for you as I thought you might get more responses .
Are you looking for investors in retirement , middle aged , or just starting out ?
The last time I sold a fund , when I realize I was holding to much LC. The sell came out of tax-free account
so no taxes at this time.
Retiree, Derf


  • I use similar approach to @observant1 on selling. An addition is ETFs and index equivalents, especially in large caps. As more actively ETFs are available, they are reasonable substitutes since they don’t have limit on holding period imposed by brokerages.
  • @Derf, Thanks for starting the thread. Great idea.

    I am looking to hear about investors’ sell strategies / sell criteria. Seems like buying strategies fit nicely into certain patterns that are replicable and I am hoping selling strategies do as well. Without selling strategies, investors can end up whiplashed, like more often than not buying high and selling low or just get suboptimal outcomes.
  • +1 sven An example is JHQAX which lost 1.73% today compared to its etf version JEPI which lost 1.41% Sold all my JHQAX holdings tonight and will make future purchases using JEPI .
  • edited September 2021
    I had to look @carew388 because I own JHQAX in 2 accounts. I wasn't aware of the ETF, but it doesn't look from a trend chart that they are the same. The ETF, JEPI, appears much more volatile and actually is a little under JHQAX in return for year-to-date.
  • +1 My interest in JEPI is that I can sell anytime without incurring transaction fees. JHQAX is probably a better investment, but I just don't want to wait 60 days to sell it !
  • edited September 2021
    I read somewhere about buying LOW and selling HIGH.. I did have some reasons to grab several thousand dollars out of the portfolio, earlier in the year. Glad it was then, not now. I'm almost--- ALMOST at the 40 stocks/60 bonds portfolio I'm aiming for. What's holding me up? Fund managers are 8% in cash. My brother the banker has recommended I go 30 stocks and 70 bonds. Maybe not a bad idea. ..... Living expenses are going to rise for us soon, in an already expensive State, just as soon as we find a place away from the insanely feral, uncivilized, non-socialized, inconsiderate assholes who moved-in upstairs some months ago. Anyhow, it's good to know I have enough to be able to grow and stretch my monthly dividends, to help pay monthly bills.

    Buy/Sell philosophy? Answer: take the money when things are riding HIGH. After the big sell-off today, on the heels of a generally stinky September, I'm still down less than -2% off my highest number, approx. I'm selling nothing. Adding a tiny amount to bonds, each month. At 67, I want stocks, just not so much as in the past. Volatility and risk feel like adversaries, these days.

    *I find it reassuring and helpful to remember than I've got a very small amount being auto-deposited into my PTIAX every month, whether things are super or smelly. Those dollars will, over time, re-grow the chunks I remove. So PTIAX will never become an after-thought. ... TODAY, post-Market: 42% stocks, 55% bonds. The fund managers are playing with some small short-positions, too.
  • I'll place this link again. Global etf's performance, some broad, some narrow sector. These update through the U.S. trading day. The "Opinion" column is a technical indicator.
    Selling or buying (when and why) is a very personal choice with many variables for all of us.
    If a brief equity market melt is upon the doorstep, we all will have to decide what to do, perhaps meaning nothing.
    My convictions for investment areas will have to remain for a long term recovery, if that becomes reality, if the investments become somewhat disassembled to the upside, during a melt.
    I remain with a conviction to an etf as QQQ (growth), BOTZ (robotics, AI), FHLC (broad healthcare), ARKG (genomics, special meds and related areas), FTEC (technology) and FSMEX (medical devices and related healthcare/products). FBCG etf (Fido blue chip growth, active managed) remains a potential when cash is available. Overlaps in growth equity will have to be reviewed prior to any adds in this area.
    Bonds? Investment grade bonds will remain to have a need to fill portions within pension funds, life insurance companies, holdings from other governments, sovereign wealth funds and "other". They are not going to become dust and blow away, down the road.

    Sell, probably not. Regardless of the current political and investment moods, there remains a lot of money looking for a home, however long or short term that may be. One may hope the money travels to your investment sector, eh?

    My non-qualified 2 cents worth.
    Take care of you and yours,

  • There's a difference between liquidating a fund position because one has lost faith in the fund and adjusting the holding because of performance. (Part of the original question included the example: "sell 25% of holding for each 20% gain in a year".)

    Performance based adjustments can be done mechanically, based on one's target allocations.

    I generally concur with observant1's approach, though I'm more inclined to let a "loser" ride longer, say three years. How much history I use depends on how the fund is managed.

    If a fund has a distinctive style, I'll tend to give it more slack. One reason is that it would be difficult to replace. Another more important reason is that because of its style, it may be more likely to do better, or worse, over extended (multi-year) periods.

    Here's a good exercise, given that "everyone" thinks M* should have downgraded TPINX before now. When would you have sold it, and why?

    The fund had great years through 2010, so let's look at the past decade. Here's a M* page with that data. Pay attention to the benchmark index (world gov bond index) rather than the category returns since the fund was not in that category until recently.

    In relative terms it was only in 2017 that performance began to fall apart. While it beat its index by 2½% in 2018, it underperformed substantially in 2017 (-5%+), 2019 (-5%+), and hugely in 2020 (-14½%).

    After its great 2012, in 2013 and 2014 the fund returned very little (2%, 1½%). Would you have sold even though on a relative basis it did great (2013) and average (2014)?

    Would you have sold at the end of 2015 after those two low return years followed by 2015 when the fund landed squarely in the middle of the pack and fell just short of its benchmark?

    Surely you would not have sold after 2016, which was a fine year (6%+ vs 1.6% for its benchmark).

    Would you have sold after 2017 which was the first really clear bad year on a relative basis? Or would you have waited to see what would happen?

    If you did wait, would you have felt comforted by the 2018 performance when the fund again beat most of its peers and beat its benchmark by over 2%? Or would you have looked at the absolute performance of 1.27% and said to yourself: this is even worse than 2017 where it returned just 2.35%. I don't care about relative performance, I'm out?

    After 2019's relative disaster, would you have called it quits, perhaps because two of the previous three years (2017, 2019) were very bad (each 5%+ under the benchmark)?

    Or would you have waited for two successive bad years relative to its benchmark? It took until 2019-2020 for that to happen.

  • I sold TTRCX in 6/2015 when I discovered a sizeable allocation to Ukrainian debt, which scared the **** out of me ! At that point, return of capital outweighed return on capital . ( Templeton A shares still carried loads then)
  • msf
    edited September 2021
    This shows that there's more than price or profits that go into deciding when to sell.

    As I recall, you were far from alone in reacting this way. So don't take the following data as a personal comment, or as something one could have predicted. Hindsight is great, but it only works for the past.

    As of May 31, 2015, TPINX held 10 Ukrainian government or agency bonds with a face value of $2.919M, and a market value of $1.425M. That was 2.1% of the fund's assets. (In TTRCX these represented 1.6% of the fund's assets.)

    Three months later, August 31, 2015, those same bonds (none were bought or sold) had a market value of $2.145M (50% appreciation), and now represented 3.5% of the fund.

    Ukraine was in trouble, and what happened that November was that the bonds were swapped:
    Ukraine’s other bondholders, led by Franklin Templeton, accepted a 20 percent principal writedown, a coupon increase to 7.75 percent, a four-year maturity extension and GDP warrants - additional annual payments linked to Ukraine’s future economic growth.

    The haircut was on the face value, which had been way above the market value. So the fund wasn't hurt by this. After the swap, as of Nov 30, 2015, the replacement bonds and warrants had a market value of $2.831M, and constituted 4.8% of the portfolio.

    As a M* analyst put it,
    Hasenstab has also shown a willingness to buy what the rest of the market shuns: He loaded up on Irish bonds in the depths of the 2011 eurozone crisis and swooped in on even shakier Hungarian debt that same year. In early 2014, he added to the fund's single-digit stake in dollar-denominated Ukrainian bonds, a move that hurt throughout [2014] but paid off during the first nine months of 2015.
    Looking at the holdings rather than the price, ISTM that taking flyers (even 5% positions) in distressed debt was not unusual. But the nearly total, long term move into purely EM debt in the mid 2010s was a fundamental shift. For me, that's what met observant1's third criterion for reevaluation: "Significant investment strategy modifications"

  • This is how I have done it since 2000(link).
  • msf
    edited October 2021
    IMHO there was no obvious point at which most people would say they would have sold TPINX, yet most people would have sold at some point. It seemed that this was a good fund to illustrate how one's sell discipline worked in "real life", given that there doesn't appear to be a "correct" answer.

    Only one taker, though.

    I did have a small position in TGBAX for several years, which I sold in late 2019. I held the position because I wanted, and still want, a smattering of international bonds to diversify the few bonds (funds) I do hold. Given that target allocation, I was not going to sell the fund because of lackluster absolute performance, but because of poor relative performance. Thus I compared with alternative funds.

    Lipper shows only 22 international (as opposed to global) bond funds, excluding inaccessible ones like DFA. Currently, one can purchase the following tickers: BEGBX, WISEX (M* classifies as short term bond, I'd call it EM as it invests according to Sharia and seems to hold a lot in the middle east), DIBAX, LWOAX, DNIOX, EPBIX, FBIIX, MPIFX, GARBX (M* call it EM bond), HXIIX (likewise, EM bond), OIBAX, PXBZX, PFORX, PFUIX, RPIBX, TNIBX, TGBAX, TTRZX, FIBZX, TIBWX, VTABX, ESICX.

    Ruling out the EM bond funds and funds that weren't even available in 2016 (FBIIX, PXBZX, TNIBX), that leaves just 16 peers not managed by Hasenstab. Of these, only 1/4, 2 PIMCO funds and 2 index funds (Vanguard, TIAA) returned more than 1.75% annualized over the past five years.

    So these funds could serve as points of comparison. Here's a PortfolioVisualizer graph comparing TGBAX with the two PIMCO funds since the start of 2011. Actually, TGBAX doesn't look bad compared with PFUIX (unhedged) until 2020.

    What happened was that the dollar took off in 2014 and 2015 (see graph here), hurting unhedged funds and apparently also TGBAX. Through the rest of the decade, as the dollar became rather volatile, TGBAX did not respond well. It's a unique fund in that it's a combination of a foreign bond fund and a currency fund. For example, it never had exposure to the Ukranian hryvnia. (More significantly, it tended to short developed market currencies.) The fact that it did not play currency well, which became apparent (to me) only in the late 2010s was a factor in deciding to sell. The fund was not adding value on the currency side.

    I will tend to wait three year before pulling a trigger. 2017 was its worst year (relative) since 2011, and while 2018 was a relatively good year, 2019 was a disaster, in both absolute and relative terms. With increasing volatility as well. This, coupled with what now seemed a long term move into exclusively EM bonds, and the aforementioned failure to navigate currencies well said that it was time to leave. Not a single factor, but a combination.

    One could easily argue that I should have left years ago. Had I known the dollar would go up so much and that the fund's purported currency expertise was not as advertised, I might have moved years ago into a hedged fund, or into a global fund.

    A related question for others: why would you have bought the fund? I ask because in terms of performance being a trigger, if one buys into a type of fund (here, pure international, not hedged back to dollar), then IMHO what matters is performance relative to peers or benchmark. And one should be careful in identifying peers. Global and international funds are different, even if M* chooses to lump them together.
  • Hi Guys

    That’s a challenging question that each of us has a different answer depending on our own investing timeframes and changing circumstances. Here is a Link to a table that provides a useful timeframe input:

    Enjoy and profit. Time is a critical player. A little luck is also important. Best wishes and lots of luck to all.

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