Taking profits

For those who don't keep copious notes on my pathetic little life, I will
remind you that I am a buy and hold investor who maintains 18 Fidelity funds
at around the same value. All distributions are directed into MM accounts.
I use the proceeds to make small additions to funds at the bottom of the
list.

Recent gains have thrown my distribution awry requiring me to make the rare
move of taking money out of the larger funds. FWIW these are Emerging
Markets (18%), Select Gold (16%), Select Biotechnology (6%) and Pacific
Basin (6%).

Not to sound alarmist but, coincidentally, I haven't had to take so much
money out since the peak of the tech bubble. I also took 6% out of Emerging
Markets, last month.

Just in case anyone is interested,

-herb

Re: Taking profits

Is it good to sell winners and buy losers? You decide.





"Herb" <> wrote in message
news:MqbMf.8907$
> For those who don't keep copious notes on my pathetic little life, I will
> remind you that I am a buy and hold investor who maintains 18 Fidelity
> funds
> at around the same value. All distributions are directed into MM
> accounts.
> I use the proceeds to make small additions to funds at the bottom of the
> list.
>
> Recent gains have thrown my distribution awry requiring me to make the
> rare
> move of taking money out of the larger funds. FWIW these are Emerging
> Markets (18%), Select Gold (16%), Select Biotechnology (6%) and Pacific
> Basin (6%).
>
> Not to sound alarmist but, coincidentally, I haven't had to take so much
> money out since the peak of the tech bubble. I also took 6% out of
> Emerging
> Markets, last month.
>
> Just in case anyone is interested,
>
> -herb
>
>

Re: Taking profits

HI herb,

I've raised a LOT of cash over the past couple of weeks and am up to
~20-25% - which is enormous for me.

I did the same to wifey and to our taxable acct.

best,

rono

Re: Taking profits

"rono" <> wrote in message
news:
> HI herb,
>
> I've raised a LOT of cash over the past couple of weeks and am up to
> ~20-25% - which is enormous for me.
>
> I did the same to wifey and to our taxable acct.
>
Hey rono:

I did know that you were raising cash which made me think *someone* would be
interested. ;-) I also wanted to contrast myself with those who advocate
simply buying and holding an index fund.

Ideally, I would be plowing this money back in at the bottom of my list but,
since most of the profits are in my SEP while my more conservative
investments are in my IRA, I will be perforce increasing my cash position.
Since I like to be fully invested, I am thinking of starting to build two
new positions (I promised myself that I would stop at 20). I am thinking of
two funds where I have little coverage: Latin America, which I think is
poised to grow well in the global economy and Small Cap Value to offset the
strong large cap growth bias of my current portfolio.

I always build them two at a time going for contrast and adding new money
gradually in such a way as to keep them equal.

-herb

Re: Taking profits

>Is it good to sell winners and buy losers? You decide.

It depends on what they do AFTER you sell them. If they go down it was
a good idea. If they go up, it was a bad idea.

Re: Taking profits

"Doug" <> wrote in message
news:
> >Is it good to sell winners and buy losers? You decide.
>
> It depends on what they do AFTER you sell them. If they go down it was
> a good idea. If they go up, it was a bad idea.

True, but I don't think a calendar should tell you when to rebalance. If you
have a winner just let it do its thing, when it starts to level off or fall
back then sell it or rebalance.

Re: Taking profits

Hey Herb,

Ed mentioned this over at fa, but I've noticed it for the past year -
telecom is starting to move - almost a stealth rally. Check Price
PRMTX. As you're probably aware, telcom/media is one of my 'baby
boomer' sectors. By this I'm talking about those sectors that should
do well during the retirement years of the boomers. They're pretty
obvious, but are worth repeating - health care, media/telecom,
financial services, and leisure. These are in addition to any other
macro trends that may exist over the next 20 years like asia and
commodities. These sectors should do well in relative terms, for the
next 20+ years.

best,

rono

Re: Taking profits

Herb wrote:
> For those who don't keep copious notes on my pathetic little life, I will
> remind you that I am a buy and hold investor who maintains 18 Fidelity funds
> at around the same value. All distributions are directed into MM accounts.
> I use the proceeds to make small additions to funds at the bottom of the
> list.
>
> Recent gains have thrown my distribution awry requiring me to make the rare
> move of taking money out of the larger funds. FWIW these are Emerging
> Markets (18%), Select Gold (16%), Select Biotechnology (6%) and Pacific
> Basin (6%).

IOW, you sold shares in Select Gold in the middle of a long-term uptrend
in gold. I could understand doing that if the fundamentals are starting
to bother you (such as the inverted yield curve). But not just because
your distribution is awry. I would have suggested you waiting for the
fundamentals to give you a better sell signal than that.


> Not to sound alarmist but, coincidentally, I haven't had to take so much
> money out since the peak of the tech bubble.

Yes, that's nothing but a coincidence.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: Taking profits

One feature of "autopilot" rebalancing is it takes away the emotion and
psychology. When the market is going gangbusters, few have the will
power to rebalance.

I've been taking money out of both stocks and bonds since July.
Although I have rebalanced correctly in the past, this one may put egg
on my face. At least so far, I am wrong. I got out of energy (I did
leave some), REIT's but kept my gold. I intend to get out of at least
some of my gold soon. I am putting the proceeds into money market. (No
sense in buying bonds in a rising interest rate environment).

Time will tell if I am right.

Market timing is fraught with peril. Few can do it consistently.

My GRMN stock is doing nicely though. You guys should buy some. It's a
winner. Still has a long way to go, and I own a (for me) a LOT!

So all in all, 2005 was excellent for me. I WAY outperformed the
market. Now the challenge is to do it again.

Re: Taking profits

"Steven L." <> wrote in message
news:tdoMf.3974$
> Herb wrote:
> > For those who don't keep copious notes on my pathetic little life, I
will
> > remind you that I am a buy and hold investor who maintains 18 Fidelity
funds
> > at around the same value. All distributions are directed into MM
accounts.
> > I use the proceeds to make small additions to funds at the bottom of the
> > list.
> >
> > Recent gains have thrown my distribution awry requiring me to make the
rare
> > move of taking money out of the larger funds. FWIW these are Emerging
> > Markets (18%), Select Gold (16%), Select Biotechnology (6%) and Pacific
> > Basin (6%).
>
> IOW, you sold shares in Select Gold in the middle of a long-term uptrend

If it's any consolation, I probably bought them during a downtrend.

> in gold. I could understand doing that if the fundamentals are starting
> to bother you (such as the inverted yield curve). But not just because
> your distribution is awry. I would have suggested you waiting for the
> fundamentals to give you a better sell signal than that.

I wouldn't know a "sell signal" if it bit me on the butt. I don't trade and
I don't try to predict the future.

I understand some people in here think they can do that and claim, post hoc
that they have succeeded. In the interest of letting my winners ride ala
Gary Smith, I give the distribution a lot of latitude to get out of whack
before I sell but as the Dolans say, it's never too early to take a profit.
These will still me my largest postions when the markets close tomorrow.


>
>
> > Not to sound alarmist but, coincidentally, I haven't had to take so much
> > money out since the peak of the tech bubble.
>
> Yes, that's nothing but a coincidence.

I think (hope?) you are right on that.

-herb

Re: Taking profits

"Doug" <> wrote in message
news:
> One feature of "autopilot" rebalancing is it takes away the emotion and
> psychology. When the market is going gangbusters, few have the will
> power to rebalance.

Bingo.

Perhaps luckily for me, I started all this just before the crash in '87.
After putting more money in then, it is much easier to take some out now.

>
> I've been taking money out of both stocks and bonds since July.
> Although I have rebalanced correctly in the past, this one may put egg
> on my face. At least so far, I am wrong. I got out of energy (I did
> leave some), REIT's but kept my gold. I intend to get out of at least
> some of my gold soon. I am putting the proceeds into money market. (No
> sense in buying bonds in a rising interest rate environment).

I don't really waste a lot of time worrying about that I should have, could
have, might have done given how the markets turned out. If I had the time
and inclination to be handicapping odds, I would not be in mutual funds.
>
> Time will tell if I am right.

Yes it will. So far we have all been pretty much wrong about this so-called
rising interest rate environment.

>
> Market timing is fraught with peril. Few can do it consistently.

Can anyone besides blow-hards making claims in newsgroups?

>
> My GRMN stock is doing nicely though. You guys should buy some. It's a
> winner. Still has a long way to go, and I own a (for me) a LOT!
>
> So all in all, 2005 was excellent for me. I WAY outperformed the
> market. Now the challenge is to do it again.

I know I outperformed the S&P last year putting in no thought and very
little effort (or so I claim, at least ;-). My only challenge is to stay
the course.

>

Re: Taking profits

Hey Doug,

Yeah, GRMN's a prize, but it's too late to buy it right now 'cause it
was featured in Barrons tomorrow so watch out above for yours - should
be worth 5-10% bounce. And yes, you can start celebrating tonight.

best,

rono

Re: Taking profits

Doug wrote:

> One feature of "autopilot" rebalancing is it takes away the emotion and
> psychology. When the market is going gangbusters, few have the will
> power to rebalance.

But why should they?

Rebalancing in the middle of a bull market is just a euphemism for
selling too early.


--
Steven D. Litvintchouk
Email:

Remove the NOSPAM before replying to me.

Re: Taking profits

"Steven L." <> wrote in message
news:auOMf.5154$

[snip]

> Rebalancing in the middle of a bull market is just a euphemism for
> selling too early.

"Early" is a word that relates to timing. I'm sure you understand that some
of us do not attempt to do this.

-herb

PS: How do you know that we are in the middle and not at the end? I
suppose that, if I thought I knew that, then I might follow a different
strategy. But I don't know that and neither do you. Of course, I hope you
are right because most of my money is still on the table.

Re: Taking profits

> "Steven L." <> wrote
>> Rebalancing in the middle of a bull market is just a euphemism for
>> selling too early.

How much are you willing to bet this is the middle of a bull market?

If it's not your entire life's savings, then you should...

Never mind. Your lack of reasoning ability is self-evident.

Re: Taking profits

Yes, well, if it doesn't go down then don't sell it. Simple right? :-)