Warnings for investors (30/07/2013)
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Michael Leslie
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Thanks guys. Just helps put it back in perspective. I have sold good companies with great prospects when it would have been best to hold rather than wait perhaps years before the opportunity presents again.
Andrew Legget
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The market of quality businesses seem to be a bit expensive so no value at the moment exists, many companies I watch are at fair value or at premiums. Even a managed international fund I keep an eye on last time I looked was trading above its NAV.
It is times like this that I am thinking about something mentioned to me. “Never confuse activity with achievement”. I will continue to wait for value rather than leaving my philosophy and chase opportunities.
Michael Leslie
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Does that mean we SELL? Does anyone have any idea?
Ian Hammond
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I suggest you work out a set of rules or criteria as to when you would sell. Sometimes investors seem to spend a lot of time working out when to buy but then are not sure about when to sell.
If something has changed and the prospects are not good for a company, or it is likely that intrinsic value will decline, it might be time to sell especially if the company is overvalued.
If there are better opportunities it may be worth switching.
I am reluctant to sell a quality company that is continuing to produce excellent results just because it is overvalued. This is because I might never buy back in. For example I have been tempted quite a few times to sell Ramsay Healthcare. I bought at $10 and considered selling at $16, $23, $28, $33 and even now at $37. I am fairly sure that if I sold Ramsay at any of these points I would not have repurchased the shares later on.
I have sold some holdings recently where I thought that price was in excess of the value going out several years and I was happier with the cash than the shares.
I think every investor should work out for themselves some rules for selling and it is always a case by case basis for each stock.