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Online Share Trading

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cleaning out the cupboard

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partridge1
Regular Contributor

Simon( I think it was) wrote about the need to bin stuff that was going nowhere and where they were now nothing more than clutter surrounded by a halo of hope (?).

I did that today. Two "post reorganisation" shares. If I say I made a capital loss on them and was glad - I would not be lying. 

The fact is that we are not so rational about these things - anyone read Daniel Kahneman "Thinking , fast and slow"?   

The reason that outsiders are priced the way they are is simply because the price reflects their prospects. And these were/are outsiders. Theoretically capable of assuming a growth path but

in terms of probabilty - but on deeper examination they reflect a business model that was "me too" , not an especially dynamic leadership - ( I am glad of that in one sense I would have been tempted

to hang in there if Joe Brilliant had been leading the team...)  only with  limited capital ( so not going to buy anyhitng big), no especially protected business - as in

wide open to competition - and moreover operating in a competitive place. It feels good. Now, what can I buy  - or add to!!?

5 REPLIES 5
SimonPB
Valued Contributor

"Thinking , fast and slow" is brilliant. Absolutely.

 

Ya I take a strong hard look at all my shares every year end ditching the dogs. Fortunately I have owned enough dogs over the years to mostly be able to avoid them these days (and had my Brainware share cert above my desk to always remind me how bad a dog can be - need to find a space for it in the new spot). Trick is we get so involved with all the effort and pride in our selection that selling is as much an emotional loss as it is a financial one.

 

My process these days is when I am buying a new stock I have to have the top three reasons why I think it is a great stock and I write them down and keep this for as long as I hold the share. This gives me a nice check list for when it time to bail. I compare a few q's against this list; was I just wrong? Has something changed so that one of the list is no longer applicable? Far from flawless but it helps.

 

And then yes we have cash burning a whole in our account and we get reckless coz we wanna spend it and so the cycle starts again.

partridge1
Regular Contributor

I like the idea of writing down the "top three reasons". (That should stop one from writing down  - and acting on, "Emotion, emotion, emotion"!!)

Captainfrom82
New Contributor

partridge1, I am not sure how comfortable you would be about sharing the names of those two shares.  Personally, I am equally keen to learn about dogs as about the good companies.  You may have ditched shares that I own, and knowing this may allow be to cut my losses.

partridge1
Regular Contributor

Dear Captain

I think  that what we should do is to ask everyone to send in the two dogs they have binned over the last 12 months - it will make for interesting reading.  And the only way to do this because of the inevitable collective

paranoia out there is for you to ask OST if they could set up a JSE list for us that we could enter ( with a bag over our heads) and tick off.?   

SimonPB
Valued Contributor

I managed to be flea free for a while. Last few were we all late 2015 into 2016;

BWN - got in at IPO without proper consideration or thought as I followed a 'friend'. Lesson learnt, do your own home work.

ARA - again got in IPO was happy enough until they decided they could give directors a very large chunk of shares. Peter argued it was fair, I argued this should have been worked out before listing and included in MON, not some 9 months later with a SENS. I bailed, the whole thing was smelling of a rush job.

STXDIV, again got this in IPO way way back. Liked the methodology, almost made it a contrarian type investment. Except that of course forward DYs to value is pretty useless as KIO, ARL, PC and others showed us. This is truly busted smart beta ETF and makes me very wary of all smart beta.