AVOIDING THE HARDEST MISTAKE INVESTORS MAKE – WHEN TO SELL!.
Written by: Robert and Russell Markham
I was interviewed by Retire Well, Retire Happy a fortnight ago. I was asked what was the biggest mistake investors make? I went on to note that the number one key mistake investors make is not knowing when to sell. One can recover from this mistake in our earlier investment years, but as we approach retirement and especially for those in retirement, this mistake can prove very costly and damaging.
So, how do we know when to sell? That will all depend on your risk money management rules that you apply. Sadly, too many investors do not have any risk money management rules. Rather, they simply buy and hold and hope that the stocks they have purchased continue to run or hold on for the Franking Credits and Dividends and pay little attention to the price of the given stock. This is a terrible mistake to make as it can lead to significant losses. So, why do some people not have trading plans that cover risk money management in place? It may be that they just have not been taught the principals of safe investing or simply do not have the right tools in place. By having an investment plan that tells you when to buy, what to buy and when to sell, this will ensure you will protect your capital and avoid costly losses taking over your portfolio!
VectorVest gives us all the right tools to ensure we can set up our portfolios and set up our risk money management rules. One of the best ways is to set up a portfolio in VectorVest and apply Alerts on your given stocks. One useful technique is to simply set up an alert to let you know when a stock’s VST (our master indicator combining Value, Safety and Timing on a scale of 0.00 – 2.00) has fallen below 1.00. I provided a useful video on how to do this the other day on the blog, check out the video on to how to set up your portfolio to get the Alerts:
Lastly, if you get the chance, you may wish to listen to my interview on “Retire Well, Retire Happy” podcast per this link:
The podcast covers:
– 2:20 Russell Markham background
– 5:40 How does VectorVest help
– 7:00 Key mistakes investors make
– 13:15 Removing the Franking Credits
– 17:00 Are investors managing their finances themselves
– 17:50 Type of portfolios
– 21:45 Why DIY investing
– 24:30 Favourite stocks at moment
– 29:10 More about using VestorVest