Wednesday, August 05, 2009

Timing the stockmarket

Dear Mr. Tan,
I have invested in blue chips, including (names deleted). These stocks are high dividend yield stocks. I bought them during the Sep 2008; just before the crash of Lehman Bro's.

With the recent recovery in the stock market, my portfolio has finally break-even in value. I am wondering should I sell all my positions now to "play safe" or should I stay put and do nothing; collect the dividend.

I don't think the current recovery in the stock market is sustainable. Please advise...

REPLY
I am not able to advice on timing decisions. If you sell the stocks, remember that the money earns you less than 1% p.a. in the bank. In my case, I am holding on to my equity investments, although they are still lower than my cost.
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3 comments:

Anonymous said...

After a deep recession, the next phase is economy expansion. That means the equity market should perform very well.

One should not time the market - it is time in the market that is more important.

August 05, 2009 5:11 PM
Chris said...

My advice is:

1.) If you are having sleepless nights worrying about your stocks, you should liquidate a portion to reduce your stress. It sounds that you are worried about your investments even though they are blue chips. I can only guess that you have a large portion of your cash tied up in them.

2.) If you need the cash to finance something else, it is a good chance to liquidate.

3.) There's no way you can time the market unless you are have perfect information. You may be hit by Murphy's Law and have regrets later on.

4.) You probably need to sit down and think about your short or long term financial goals. Once this is set, you will not need to ask this question on when you should sell. You should sell when your goal is met.

Hope it helps.

August 05, 2009 6:03 PM
Anonymous said...

I was facing the same situation.

When the price is about 10-20% higher then my cost, I choose to sell 1/3 of stock to average down my cost. I saw higher % of return, say 15-30%

At the same time:
a. earn dividend from the remaing 2/3 of stock.
b. feel happy, when the market goes up for still keeping the 2/3 of stock.
c. feel happy, when the market go down for having cash on hand to average down.

Hope you are a happy investor.

August 05, 2009 11:02 PM

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