How to choose which small stock positions to sell?

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  • #91831 Reply

      I have too many small stock positions. What’s a good method or approach of going through them to decide what keep and what to sell? I don’t like to sell anything for fear it will go up and then I’ll experience the regret of having sold at the wrong time.

      A bad mentallity, I know. But I’m trying to get over so I can concentrate my investment dollars better. The portfolio has been performing well as whole….But I do think it suffers from “diworseification” to a certain degree.

      #91832 Reply

        I used to have the same issue. Selling losers just felt like admitting defeat.

        So, I kept them years beyond what I should have. Then I did some math on what my account would be if I just invested in an SP500 Index fund and saw how much money I left on the table because of my pride. That’s when I got out of individual stocks and switched to Index Funds exclusively.

        My account balance thanks me for getting out of the way.

        #91833 Reply

          Read about sunk cost fallacy. You can also calculate how much you’d lose hanging onto a single stock that’s been trading sideways over extended periods of time or worse underperforms the market. For me at least, it was also emotional decision.

          I trimmed down my portfolio from over 25 stocks to just 6 and I’m a lot less anxious now.

          I don’t feel the need to check my portfolio as often as I used to.

          Don’t miss: If you had $200,000 in Meta Platforms (formerly Facebook) stock. What would you do?

          #91834 Reply

            Sunk cost fallacy. I used to have so many smaller positions in a few stocks like ABNB, PINS, CHEWY, BA, Doximity, ARKK, PayPal.. it felt like I was diversifying and doing something. Actually, each of them had about $300-1000 in it and nothing significant and a lot of them had lost 50-60%. I bit the bullet and sold it all and took a loss.

            Now, it’s reorganized and I have a plan.

            It’s 60% VOO, 20% SCHD, 10% AVUV and 10% large international stocks ex USA. It’s humming along nicely.

            Every one makes mistakes. Just pick up from there and move on.

            #91835 Reply

              Went all index years ago after learning that the more “often” you trade, the more the house wins, and you lose. Never looked back.

              #91836 Reply

                Use something like portfoliovisualizer to compare the aggregate performance of your stock portfolio to the S&P 500, The total market, the nasdaq, etc.

                #91837 Reply

                  If you like the stock I’m okay with the Warren Buffett holding period of forever. Do your research. Decisions make more sense when you know what is going on at the company. If you want to sell and the positions are small it may not be worth the brain energy, sell and move on.

                  Two questions to ask yourself:
                  1. Why did I buy these and is the same story or purpose still true?
                  2. If I sold these tomorrow would I buy them back?

                  Explore these too: Any more suggestions for stocks good for cash flow generation?

                  #91838 Reply

                    Generally, sell at 52-week highs, and evaluate if that offsets selling any at 52-week lows. (This is all assuming you don’t even follow these companies on a weekly/monthy basis – several companies are still move higher due to market cap opportunity, i.e. upside. If you don’t even understand these companies, then sell any at 52-week highs).

                    Stocks are REAL COMPANIES, they don’t just go up/down like the tide in the ocean in/out on the shore, or a whim – they have financial opex/capex, business fundamentals, and market contraction and expansion. E.g. Uber was a DOG since IPO: not profitable, getting into auto-taxis – new ex-Expedia ceo came in and turned that ship around, focused on food delivery and overall transport mobility to get profitable and into the S&P 500. If you DGAF on short-term movements (2-3 year, 3-5 year plays), then just do index funds for time duration.

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