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Discussion Starter #1
This is a bit of a philosophical question for the more active investors on the board. When or how do you decide to take some profit off the table or sell off a position entirely? What factors would you consider?

To put this in context, I bought some investment grade bonds near to the trough of the financial crisis. I have held them for almost 18 months, and they have appreciated 30%. If you include the value of coupon payments that I have received and invested, my total return is almost 40%. Now with the prospect of rising interest rates later this year, and the shrinking prospects for further capital gains, I am wondering if I should sell the position. The bond issue in question is quite long-dated, so I don't think it should be too sensitive to small changes in short-term interest rates.
 

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I usually take profits when either of the following occur:

1) price is approaching/met/or exceed my calculation of intrinsic value based on my original investment thesis
2) there has been a fundamental change for the worse
3) there is a better place to put my money that will generate a higher return
 

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If you want something unambiguous, you can use a moving average. Sell if the asset falls below the 50, 100, 200 day moving average.
 

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If you are asking it's probably time. I always have % in mine and sell at that point.

The best advice I got was "There's a lot of slaughter cattle in field".
 

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if it were myself, i would consider how these bonds are fitting into my overall portfolio. If i believed i needed bonds, i'd ask myself whether i would be able to replace these bonds - because they sound like an excellent & timely purchase - with anything remotely comparable.

however, if my scenario were vastly different - if i had purchased these as distressed corporate paper aka junk bonds on an equivalent-to-stock-but-slightly-safer basis during the global collapse - and if i did not need these bonds for portfolio stability or fixed-income hedging, then i might consider selling them. I'd be more willing to sell if i could foresee an offsetting capital loss to be taken in 2010.

there is a portion of my portfolio that is traded frequently. Options and selected microcaps. For these decisions, i consider news, financial analysis (as best i can), a range of analyst's opinions (to a certain extent) and technical charting that plots bollinger bands, stochs, macd and rsi as well as 200-day, 50-day & 20-day moving averages (to a much greater extent.)

on the other hand my sibs, cuzzins & i still have bmo & ry shares that our grandfather bought a century ago. Now how is that for Buy n Hold.
 

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Good question and one I DO NOT KNOW THE ANSWER TO!
And that's very frustrating.
I find it pretty easy knowing when to buy, it's the selling that kills me.
How many times have I been up only to watch it all slip away?
Stops don't work all that great either.

My worst/best move this year (so far)...
Selling most of the GCE I bought for 0.68 at a 100% profit.
I was tickled pink at the time...lol.
I still have shares (free shares) I sold enough to get my initial investment back so what I have left is all profit. I wish I kept them all though!!!

Even though I don't know the answer to your question what I try and do is before I buy I figure what and where to sell. If you stick to that and achieve your goal you should be happy...that is unless it goes up another 900%.
 

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Discussion Starter #8
Thanks to everyone for the input. While I have been recording the bond price regularly, I haven't retained sufficient data to make a useful chart with moving averages or other indicators. I'm not sure if the indicators for triggering stock buy or sell decisions would be of much use in the case of these bonds.

humble_pie,
Right now, I don't think that there are any bonds that can earn me a comparable yield that are rated higher than junk. I remember when I bought them, I thought that the yield-to-maturity (near 8% at the time) was far too high for bonds of that credit quality. I figured after 1-2 years, I would make a decent capital gain after credit spreads had narrowed, and collect coupons in the interim. Well, that decision was prophetic, but I don't feel like I want to collect my gains yet. I mentioned that they were very long dated. I can continue to earn the same yield for long time. In terms of portfolio fit, they are not being held to save for retirement. I put them into the portion of my portfolio intended to save for nearer term cash needs, like saving for a down payment on a property. I guess my investment horizon doesn't quite match up with the investment's intended purpose.

I suppose there is not much harm in continuing to hold the bonds and collecting coupon payments. There is some risk from rising interest rates and a spike in credit spreads (the latter risk seems pretty low right now). I don't need the cash right now, and with the small amount of research I have done I haven't been able to locate an investment that better fits my current objectives.
 

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777God said buying easy and selling is hard my mentor said "There's a lot of slaughter cattle in the field" Sell and never look back.

I also watch for significant price increase with no increase in volume that's immediate sell.

I'm also talking about stocks and don't really no enough about bonds except 40% seems huge.
 

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I think someone did a study that showed one of the main reasons that active managers trail the index is they sell their "winners" too early. This applied to equities mostly.
 

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I'm also having trouble with this too.

I have $5060 investment in a TFSA that has appreciated (through equities) to $5460. I want to sell off $460 worth of shares to cash in the gain I've made but I am getting a fat dividend every month and am also enrolled in the company's DRIP.

Any advice?
 

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"Sell and never look back" is good advice. Easier said than done for me lol =)

Keeping the stock you just sold on your 'stock watch' list is like...keeping your ex-boyfriend on your friends list on facebook lol.

you can't help but either a) feel great the the stock did a nosedive, and your ego is stroked or b) the stock kept on climbing and you want a piece of the action but will likely be burned.
 
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