Author Topic: Sell in anticipation of a dip?  (Read 205 times)

Offline Smurf Hunter

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Sell in anticipation of a dip?
« on: January 11, 2018, 10:08:15 AM »
Aside from commission/transaction fees and some missed gains, is there any downside to exiting a position when you've made 20-30%, wait for a correction, or "bad day" and re-enter the position with equal or greater shares?

If this is a viable approach, are their guidelines or philosophies about any metrics?

I'm thinking how in football there's a commonly accepted "field goal range" where you're too close to punt. I don't need exact details or advice, just wondering how others think about this stuff.

Offline CharlesH

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Re: Sell in anticipation of a dip?
« Reply #1 on: January 11, 2018, 05:12:41 PM »
Well, the downside of selling on the highs and buying on the dips is that you may sell and the stock/fund/cryptocurrency/etc. may just keep going up.  Or you might buy back on the dip and your item just keeps dipping down to zero...
 
Philosophically, I stick to a general level of diversification and try keep the portfolio in line with how much risk I can afford.  I use index stocks and very short-term bond index funds and just rebalance 1-2 times a year to get back to my chosen diversification level.  No homeruns. No ground-outs.  Very boring.  But for me it has worked.
“People are fed by the food industry, which pays no attention to health, and are treated by the health industry, which pays no attention to food.” ― Wendell Berry

Offline Smurf Hunter

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Re: Sell in anticipation of a dip?
« Reply #2 on: January 11, 2018, 05:21:05 PM »

Philosophically, I stick to a general level of diversification and try keep the portfolio in line with how much risk I can afford.  I use index stocks and very short-term bond index funds and just rebalance 1-2 times a year to get back to my chosen diversification level.  No homeruns. No ground-outs.  Very boring.  But for me it has worked.

Generally I do too, but as a recent example, the S&P500 is up around 20% in the past year.  That's not normal.  I instinctively want to harvest that, as it seems likely to recede.

Offline CharlesH

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Re: Sell in anticipation of a dip?
« Reply #3 on: January 11, 2018, 05:27:14 PM »
Generally I do too, but as a recent example, the S&P500 is up around 20% in the past year.  That's not normal.  I instinctively want to harvest that, as it seems likely to recede.
 
I agree with you and I do re-allocate, once or twice a year regardless of gains or losses in the stock market.  However, I did reallocate in December (off my cycle) because of those gains you mention.  I’m in my mid-50’s and try to stay around 2/3 stocks and 1/3 cash.  I rebalanced back to that allocation in December.
“People are fed by the food industry, which pays no attention to health, and are treated by the health industry, which pays no attention to food.” ― Wendell Berry