Sell Trades for January 1 – 17, 2020
Human behavior is strange. Many buy an SUV or home without thinking about the price today versus the price next week or a year from now. The assume the price today is the best price after some comparison shopping. When it comes to investing, however, many are afraid to pull the trigger to buy or sell an investment. They worry and procrastinate. It is better to have good, objective reasons for investment buy or sell decisions.
Sometimes the best way to learn when and why to buy or sell is just to give some examples. To that end, I will share the buys and sells I have done since the beginning of 2020. Is the market expensive? Yes. But is it more expensive now than it will be a year from now? We don’t know. You cannot make investment decisions trying to guess the future.
Don’t be alarmed by the number of trades I do. You don’t have to trade as often to be successful. Bear in mind that this is my “part time job” so I have time to do a couple of trades every week. So far this year I sold seventeen positions. This is a bit higher than normal because I did some trades for my grandchildren in their UTMA accounts. During the same timeframe I completed 27 buys. Most of those were just adding shares to existing positions. In this post I won’t discuss every trade and every reason for each trade. The objective is to highlight a few key trades and why I made them. For today’s blog I will start with the investments I sold. I will discuss the buys in the next post.
Sell to Diversify – As you can see, my completed sell orders included trades for my traditional IRA, Charlotte’s IRA, our brokerage account and for the grandchildren (UTMA accounts.) I sold about one half of their FTEC ETF shares because they have grown so much in value during the past three years (122%) that FTEC was a much larger share of their total investments than it originally was. I want to redeploy their investment gains into a more diverse set of stocks, perhaps even in emerging markets.
Sell to Raise Cash – some of the investments were sold to raise cash. Cindie’s mother, Charlotte, is required by law to take RMD withdrawals from her IRA. Her Microsoft and Apple shares have risen dramatically in value, so I sold a portion of both investments to raise cash for the first half of her 2020 RMDs. I sold our IBM shares in the brokerage account to raise cash as well. You will note that I bought more shares of IBM in my traditional IRA, so I am not abandoning IBM as an investment. I sold 25 shares and bought 50.
Trim position to diversify – I sold 50 shares of AAPL but still have 283 shares. Because AAPL has done so well, it is time to take the profits and buy some additional shares of other companies.
Sell Speculative or Weaker Positions – Some positions, like KGC, LAMR, LMAT and USB were complete sales. I did not keep any of the shares. LAMR was profitable but I did further analysis and decided the dividend yield was weak. LAMR’s debt leverage health seems a bit dicey. It is also a slower growth REIT. USB was a long-term holding, and although it was profitable, it was lagging other more powerful possibilities. KGC and LMAT were speculative, so I sold them to grab the profits. Sometimes I buy shares with no intention of holding them for the long term. That is why it is important to have buy and sell rules so that you make decisions based on predetermined guidelines and objectives.
Buy-and-Hold is a good idea and is my preferred approach. I held Apple (AAPL) shares for a long time and continue to hold them. But it doesn’t hurt to lighten up on a position if you have some diversification opportunities that make sense or if you need cash for other purposes.
If you have specific questions about any of my trades, don’t hesitate to ask in a comment or send me a message.