General Strategy: Buy, Sell, Hold

I have only been doing this seriously since mid 2020 so I am still a rookie. As a general rule, I buy stocks with the intention of holding them long term because that is my strategy AND most of what I elect to manage on my own is in non-registered accounts (so selling creates capital gains that I do not really want to incur at this time in my life).

That said, if I had sold my Canadian Holdings in May 2022 and gone away… I would have made realized significant gains compared to holding.
If I had sold my US Holdings in May I too would have made some significant gains but no where near what I would have made if I sold in January 2022.

The markets appear to be settling (but still a bit choppy and maybe even volatile some days) and I am confident that the majority of what I own will recover to highs in the next 6 – 9 months and for the more riskier moves I made should pay off if I simply wait 3 – 5 years.

My question… should I be considering selling full or half positions when the stock:
– Hits its 52 week high?
– Hits the average or highest analysts rating?
NOTE: I know I own far too many different stocks (I am in the range of 50 – 60) and my positions could be as few as 100 shares and no greater than 1,000 shares of any company.

Should my decision differ if the stock is a dividend payer vs. a non-dividend payer?

I am sure this question is likely beyond the scope of the membership and there is probably no right answer but I thought I would throw it out to you guys to see what your thoughts are.

Keep up the great work!

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Asked on August 2, 2022 8:12 am

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Private answer

Your question is certainly in the scope of a membership. We don't mind answering it.

Rebalancing however is often a personal choice. For example, Mat rarely rebalances and just feeds new capital into his portfolio and adds to positions to level it out. Me on the other hand, I rebalance quite often.

For example, due to the financial runup in 2021, I sold quite a bit of my financial stocks to get them down to 3% allocations (TD, RY, IFC, BMO etc). And in 2020, I ended up selling off a large chunk of my Lightspeed and TFI International positions because they bloated massively over the duration of the year because I bought at very cheap prices.

I don't think I would ever blame someone for taking profits. For me, rebalancing and buying/selling particular positions isn't necessarily about booking profits. I'm pretty much instantly moving that money elsewhere. For me, It's more about maintaining a well-balanced portfolio. I try to keep no more than 20% of my portfolio allocated to a single sector. The reason I rebalanced my financial holdings is it started to exceed 25%. In the situation of Lightspeed and TFII, they recovered so greatly after the pandemic they actually held double-digit weightings in my portfolio overall, and for me, that was way too high.

I like to have a set allocation for a particular stock, and I try to stick to it somewhat. I'll obviously let them run a bit, but if I took a..... 2% position in say Lightspeed Commerce and it grew to 5-6%, I'd certainly be looking to trim that back to close to my original allocation, unless I felt more confident in the company as a core holding and was comfortable giving it a larger allocation.

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Posted by Dan Kent

Answered on August 3, 2022 8:10 am

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