Ya gotta know when to walk away
November 24, 2021 Leave a comment
This price chart is an example where you should take profits or ‘manage’ your position.
The stock was a nice performer for our client portfolios in the last part of 2021. In the first quarter of 2022, I trimmed the holding (I thought it was quite prudent to adjust my weighting once the stock doubled) and eventually exited completely.
I thought the stock was fully valued and amongst other considerations I wasn’t a buyer at those new improved levels.
But there was a problem…..
Some investors were a little irritated that I was ‘becoming a ‘trader’ rather than a longer term investor. As I was suggesting we take profits within a 12 month window, this meant some investors faced a taxable ‘short-term’ gain.
When cash is earning you less than 1% and a stock doubles in a very short period of time (perhaps capitalising 3 years of earnings growth within a 7 month period of stock performance)……..you take the profit.
Otherwise, the ‘market’ has its own profound way of solving your tax problem.
Behold………the stock has halved.
Buyers from a year ago, no longer have a tax problem.
I feel a Kenny Rogers song coming on.
November 24, 2021
by Rob Zdravevski
rob@karriasset.com.au
