Do you prefer to sell your winners or losers?

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Hello Dan and Matt,
Do you prefer to sell stocks you are in the green or red with and in which situations do you change your mind on? To some it might seem obvious sell in the green but those are probably the ones that will continue to win.
Thanks

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Asked on May 7, 2021 1:05 pm
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Thanks for the detailed answer Matt.
Would love to hear how you use your growth portfolio differently Dan.

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Posted by Dan Kent
Answered on May 9, 2021 12:23 pm
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Hey there,

I have no preference on selling winners or losers - it all depends on the stock itself. I tend to have two approaches - one for my dividend/foundation stocks and another for my growth.

In terms of dividend/foundational stocks, I buy with the intention of never selling. The only time i'd consider selling a winner or loser is if my investment thesis has changed. Since good solid companies form the basis of that section of my portfolio, it is rare whereby i'll sell a position.

As for my growth, I always buy the stocks with the long-term in mind but always have a plan to recoup my capital (kind of an exit strategy). So if the stock runs up, I may chose to exit a portion of my position and hold the rest. I do this with all my growth stocks. I know this in advance of purchasing, so if the stock reacts accordingly I execute the plan. It will also vary depending on the stock. Since i invest in more speculative positions, investment thesis does change more often so I may sell a winner or loser if the reason for which i bought it changes. This happens more often in my growth portfolio and could be a winner and loser.

Case in point i ahve XBC - and the situation has changed. However, I am given them a quarter or two to see how they perform in relation to guidance. If they keep missing, I'll cut my losses (50%) and sell out. If the can hit estimates, I'm likely to keep the stock and not sell at a loss cuz i still like the industry in which they operate. They just had some very poor financial controls which need to be resolved.

Likewise, I may sell a growth position if I see a better opportunity that I don't want to pass up and I have no cash available.

Hope that helps, that is my approach - Dan's is different than mine for the growth portfolio but he can speak to that.

Mat

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Posted by Mathieu Litalien
Answered on May 8, 2021 9:01 am