Opinions/guesses on timing stock sale

In My Humble Opinion
21

“Credentialed” financial advisers are just as full of it as anyone else who pretends to know the future. He may well have other assets, but according to the OP, he is *depending *on these assets for a near term expenditure. He may face penalties if he has to withdraw from other, say, tax deferred assets, or funds not at maturity to cover the expense he anticipates, which would make the pain of a short term dip in the securities even more painful.

And as far as strong stocks are concerned, would you be talking about strong stocks like GE, MSFT or P&G? All were considered industry leaders, strong stocks, and all have suffered huge declines at some point in recent history. P&G, a “safe” “conservative” stock, lost over half it’s value in 1999. MSFT used to trade at 60. Look where it is now. GE was practically a mutual fund in itself, one of the most respected holdings on Wall Street. You probably know what happened with them.

Years ago, I had a landlord who was a broker for Lynch. The stuff he told me was enough to curl your hair. It was the sort of stuff that has made news in recent years, dumping stock on unsuspecting buyers, churning, etc. If I were an investor, I would steer as far clear from “Credentialed” financial advisers as possible. They are nothing but used car salesmen with nicer offices.

If Dinsdale isn’t qualified to manage a portfolio of individual stocks, and it sounds like he isn’t, he would be better off in a no-load mutual fund where he can set it and forget it. Brokers and advisors are for suckers. They are always trying to sell you something, and they are taking a commission or a fee for doing what Vanguard or similar organizations can do without all the hype and manipulation of the client, and at a much lower cost.

The reality is that “professinal” financial advisers can’t tell you a damn thing of value to earn their cut that you can’t find by picking up a $12.95 copy of “Investing for Dummies”, and spending an afternoon or two reading it. They are in it for the fees and commissions, and all that comes out of money that will not go to the investor. Font loads, back end loads, fees, commissions, it puts the investor at a disadvantage.

Are you seriously contending that I am giving him the wrong advice? Again, investing 101. Funds needed for short term expenditures should NEVER EVER be in securities.

Dinsdale wants someone to tell him what he wants to hear: “Let it ride, this rally has a ways to go yet.” People that listen to what they want to hear are often deceived. He might as well go to Vegas. At least there, they’ll give you some free drinks, and maybe even comp you some show tickets if you drop enough money. All a “Credentialed Financial Advisor” will give you if you lose your money, is a pitch to buy another one of his financial “products”.

22

And that is why you hear of him. Statistically, there will always be winners and losers, people who outperform or underperform, but you never hear about the losers. The vast majority of investors will do about the same as the market average, give or take a little. Every year, one of the papers, maybe the WSJ has a monkey pick stocks by throwing darts at the financial pages. The monkey often outperforms the market. Very few stock pickers and fund managers do so consistently, and again, the ones who do may just be outliers. When newspapers or financial websites run stock picking contests, the winner often has spectacular gains. What you never hear is what the winner does the next year, or about the kind of performance the winner got from his or her real life portfolio during the same time period.

Again, “A Random Walk Down Wall Street” is an excellent book. Of course, if the thesis of that book is true, and I believe it is, then pretty much the whole financial services industry is a sham. Stock market investing is for the long term. Trying to time the market on a short term basis is a fool’s game. I am concerned that Dinsdale will wind up being forced to sell at a disadvantageous time to pony up the tuition for his kids. It is good to hear that he is doing well with other investments, so a loss won’t cause him undue prvation, but he seems more like a gambler than an investor at this point.

I would point out that the market has had a good recovery. That would make this a good time to sell, regardless of other factors. At least he didn’t bail at the bottom, so that is something to be happy about. :wink:

23

And actually PG took it’s huge drop in the first part of 2000, as I go back and look at the chart. That was considered a good “grandma” investment, up there with utilities as a safe investment. After all, everyone needs soap! Between early January and early March of that year, it went from 58.50 to 26.50 in about two months, making a loss of 54%, a loss that it took five years to recover from.

Combine that with the uncertain times we are in at the moment, and I can’t see the logic in taking undue and unnecessary risk at this point. Dinsdale’s greed is talking to him, and I am reminded of the Buffett quote I used upthread. Or as the old saying goes, making money in the stock market is easy, buy low and sell high! The market is up.

24

I am not sure we’re talking about the same thing, here. Establishing targets and having sell rules is critical if you’re going to make money in the market. Taking your gains and moving on to the next winner is indeed exactly what I am talking about. You are correct that trying to time the overall market is generally a bad idea, but there are indicators of when a market is on a downswing. Saying to yourself “maybe I can get another week ro month of gains” is exaclty what Iam advising against. If the signs are that a company is on a downtrend, you sell, you do not wait for the whole market to come to the same realization you did. You do not wait for the long-term capital gain to come into effect. You sell.

And Stan, not all series 7 and credentialled financial advisors are worthless. These guys study for hours a day at stuff I only have time for a trivial glance at. There are some hucksters out there for sure, but there are ways to avoid them as well. Your point about “strong” stocks is worthless. At some point, every strong stock passes its maturity point and should be sold, or it should be sold before the overall market takes a huge dip. These huge dips, despite what many people say, are not invisible. Selling off on the downslide last october woudl have been a good idea, even in October. By February, you could have gotten back in to the market overall as the prices were back on an upward trend for several weeks.

We could go around all day about investing. The bottom line is that Dinsdale should take a look at what he’s invested in. Are the companies you invested in showing increase EPS when split-adjusted over the past few quarters, or are they just generally riding the upswing on a market recovery? If the latter, then getting out before people see the emperor has no clothes is a good idea. Otherwise, it might be wise to hold them a bit longer, but overall market conditions could cause them to drop a bit, so hedging your risk somewhat is wise. Kicking yourself because you didn’t hold out till the very tippy-top is faulty logic. People who hold out till then typically hold out too long and end up selling on a downtrend.

25

Only 3 posts in a row there, Stan. You’re slipping!

We’re talking maybe 5% of my net worth here, stocks in well-established companies I have held over 10-15 years. With one exception, even at the lowest point last year I had significant gains on all of them, and enjoy the regular dividends.

If I wish to, I have any number of other ways to finance my kids tuition. Sould I choose to, I would not at all mind holding on indefinitely to all but one of these stocks.

26

It is my contention that they are. They may even sincerely believe that they are not, but statistical analysis says they are.

And they do about as well, on average, as the Monkey over at the WSJ.

Yep. Stay away from the whole bunch. :smiley:

My point is that any stock can have declines. I divested a lot of my P&G just before it tanked in early 2000. Pure luck. It had a good run and was starting to dominate my portfolio so I cut some of it loose. I was not foreseeing the spectacular drop that the share price took, literally beginning a week later. I still don’t get what that was about!

Well, since you can so easily see these things, I trust you will be linking to some pics of Inga, as she prepares to oil you up on your yacht! :wink:

:smack: So THAT’S what I should have done! Hindsight is 20/20. Not buying it.

Whaa? It might go up or it might go down? No shit.

Is that not exactly what I am advising? We have had a very nice run up. Not a bad time to sell. Certainly better than a few months ago.

27

My quibble is that trained professionals are notoriously poor at spotting downtrends or uptrends ahead of the market, and individuals who do it as a hobby usually kid themselves to their own ability to do this.

To directly answer the OP:
Anything you need for cash in the next 12 months should be converted to cash now.

Anything you need for cash in the between 12 and 36 months should be 75% cash.

36 to 60 months - 40 - 60% cash.

Don’t try to time the market. Liquidate what you need for February now. No one has the crystal ball that can predict where the market will be and what it will do between now and February.

28

One of these things is not like the other.

So you have a net worth of around 200k.

So, college age kids, so you are at least in your 40’s, and your net worth is only 200k, some of which you will be spending on tuition and probably other education related expenses. I assume some of that net worth is home equity. I would not call that “comfortable”. Like many people, perhaps you have underestimated the amount of money to have a comfortable retirement. Still, you have time to build it up, assuming you don’t get trapped into selling investments at inopportune times to meet current expenses, like tuitions. :frowning:

Or less. Or more. That is my point. People are afraid, and aren’t spending money. Bad holiday season= stocks tanking around the time frame you need the money.

Perhaps so, perhaps not.

I would go with your initial sentiment here and do the safer thing. Remember, the real way to build your portfolio value is to keep adding to it. Presumably you have earnings, if you set aside $500 a month to add to the kitty between now and early next year, there is a few thousand more for your senior years already.

Or even better, if you are carrying any high interest balances on credit cards or auto loans, pay those down first.

Good luck to you Dinsdale. I am not trying to bring you down, just dispense some sound advice.

29

THIS.

30

But I’m a (former) Series 7…

P.S. When I say cash, several short term instruments can help to maximize return on cash, such as 90-day treasuries, bank CDs, etc. I’m sour on Money Market funds right now, but that is a personal bias and large reputable firms are extremely unlikely to “break the buck” (allow a MMF to go below $1.00). No need just to put it in a savings account earning 0.4% annually.

31

And I was agreeing with you. Hear that Dinsdale? He’s a former Series 7!!!101lol!!. Me, I just learned some of this stuff the hard way. :wink:

Either way, on 10k, it’s chicken feed. Enough for a good night out with the missus. The main thing is to insulate him from downside risk in the short term, and get him to increase his savings. A net worth of 200k at his stage of life doesn’t bode well. I assume that includes any home equity, although he may not know the meaning of net worth. Assuming he continues to save, and build equity in the house, he may be ok, especially if he is willing and able to work past 65. Remember, Dinsdale, the stock market may go up, but a lot of that will be eaten up in inflation, especially with the government printing money like it’s going out of style. You may retire a millionaire, but by then a loaf of decent bread is gonna be ten bucks. For sure max out your tax free and tax deferred savings. And don’t count on Social Security. It hardly pays squat now, in twenty years, fugghedaboudit.

32

I have to agree with **Stan **on this one.

Dinsdale, think of it like this…

If someone handed you $10k today, would you invest it in those same stocks at their current prices with the plan of pulling the money out before February when tuition is due.

No, right? At least I hope that’s the answer, otherwise you like gambling to much to take any of our advice at heart.

If your answer to the question is no, you should probably sell it now and minimize your risk.

33

Clearly we can’t advise you on when you should sell your stocks. Particularly since we don’t know what positions you have nor do we know the fees your brokerage charges. IMHO (IANAS7), if you need the money in February, I suggest dollar cost averaging your returns by selling of a portion of your portfolio each month until February. Taking into account fees and whatnot.

I can tell you taht most experts seem to think the recession has passed. Unemployment tends to be a lagging indicator so it may not be the best judge of what the market is going to do.

34

I’ve decided what I’m going to do in this instance. Thanks folks - just about all of you offered something of interest/value.

One thing tho Stan, if you’re gonna quote someone in an attempt to appear clever, you’d do best to not edit out introductory clauses such as “With one exception. . .” Hope you invest better than you read. :wink:

And you made some mighty unwarranted - and laughably incorrect - assumptions in coming up with your estimate of my net worth. When I said “We’re talking maybe 5%” in no way was I referring to the $10 I needed to cash out by Feb.

But like I said - this thread gave me some food for thought, and a few good laughs.

35

This is incorrect. Securities include a wide variety of investments, many of which are highly suitable for short-term investments (for example, a money market mutual fund). It is important not to confuse securities with equities, which is just one subcategory of securities. Please see the following for a good description:

36

What’s a SDMB thread without a vocabulary pendant.

I corrected myself above because, in general, non-legal financial services industry usage, “cash” means any short-term, highly liquid instrument (technically, cash equivalents). Securities mean equities, fixed income and hybrid products, and derivatives are usually called out separately. Our legal documentation will be much more exact, but when I talk to anyone about “securities”, they know I don’t mean “cash”.

37

Yeah - I love it when those vocab “pendants” hang around! :stuck_out_tongue:

38

And a spelling “pendant” too.:smack:

grumble…grumble…posting when I should have been sleeping…grumble

39

It’s not about whether it complicates the return. It’s about whether it would be more advantageous tax-wise to incur the capital gain this year or next. That decision depends on factors such as your income, deductions, other gains and losses, etc.

40

Thanks.

What I was trying to convey is that I could style this particular sale so as to either give us a gain, loss, or wash either this year or next. But we are just getting out of a situation in which we ended up with a weird hodgepodge of small amounts of diverse investments - (long story I’m not going to provide) - which caused our return to be WAY more complicated than it need to be. We have intentionally taken steps over the past couple of years to simplify the process of doing our taxes, and I didn’t want to backslide unnecessarily.