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Re: [sharechat] a cautionary tale?

From: "" <>
Date: Tue, 24 Feb 2004 22:36:17 +1300

Hi Stephen,
>I thought this might stimulate some discussion on the perennial topic
>"when to sell".
>Here's my tale.
>I started buying shares for the first time in June 2003.
>A month ago I was feeling very clever indeed. My mixture of BCA, 
>POT, MHI, WRI and WHS was up 14% + dividends - not bad for a 

A fairly sensible collection of shares, albeit skewed rather heavily 
towards retail and financial services.    

>Today I sold WRI and WHS, anticipating further decline, at a 13 and
>15% loss respectively. I'm still in the black overall, but not feeling
>nearly so clever.

Did you invest knowing that you would *need* to sell out again within a 
few months?     

>I'm guilty of having abandoned my own plan, which was to follow the
>maxim "sell if you're confident you can buy back in later at a better
>price". I actually did think that about two weeks ago, and should have
>acted then.

So you predicted the greatest natural disaster to hit New Zealand in 
seventy years?    Well done.   Pity you didn't tell the lower North Island 
farmers that!   Could have saved them a lot of lost stock!

I can spot the obvious flaw in your plan - overconfidence!     Trading on 
'gut feeling' is an almost certain way to underperform.
>Since I'm still in experimental mode, I haven't committed all that I
>might to the market, so it hasn't been as hard a lesson as it might
>have been.
>On the menu for investigation: GPG, HQP, FRE, MFT, RNS, PVO, 
>buying more MHI should it dip, and learning more about ASX stocks.

Possibly some good shares in there, but on a value for money basis 
they are all inferior to the two you just sold.   I think you need to learn a 
bit more about valuing shares.

Try this for a strategy.   Be greedy when others are fearful, and fearful 
when others are greedy.   Works for me, and another chap with the 
initials WB I think.


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