I’ve just been playing around with the spreadsheet that I use to track my equity/fund portfolio. As usual I’ve been tinkering with the sheet, increasing the automation and improving the metrics and formatting as I often do when I’m bored!
While taking a closer look at some of my positions and more specifically the trades I’ve done over the last few years, I realised that I have only sold two positions in the last 4 and a half years. I often talk about how I invest for the long term but I’ve never really made a concious effort to look back to see if my actions are true to my word.
Since [proper] records began Under The Money Tree, here are my longest and shortest holdings:
Longest Holding Period: 8 years and counting (City of London Investment Trust – CTY.L)
Shortest Holding Period: 20 months (Chesnara CSN.L)
Seeing that my shortest holding was 20 months pleases me. This tells me that I am indeed doing as I preach and focussing on long term investments as opposed to short term capital gains.
Why I Don’t Sell Often
First and foremost the fact that I’m primarily an income investor means that watching the dividends roll in each month is exciting. I look forward to receiving emails from my on-line broker notifying me that a new contract note is available to view. This invariably means that a dividend payment has been credited to my account. The best part is that these payments increase in size over time thanks to me compounding re-invested dividends as well as continuously adding and investing new capital to my accounts.
When choosing my investments, one of my main criteria is to select securities that help me protect my capital. Investing in large, stable, defensive companies and well diversified funds allows me to reduce volatility in my portfolio and avoid big loss situations that might force me to close out positions.
It’s a well known fact that over trading leads to increased payment of fees. I’m always trying to squeeze the fees I pay down in an effort to maximise my portfolio returns. In order to do this I tend to only invest in holdings I know I’m going to keep for several years.
Don’t Look Back in Anger
Both of the two ‘recent’ sales I mentioned at the start of this post (Vodafone & Chesnara in case you’re wondering) have turned out to be bad decisions based on the subsequent share price moves and dividend history.
Vodafone was sold in October 2013 on a whim for about £2.20 per share. While the price tailed off since the sale, it has recently bounced back to £2.09. Since selling there has also been £0.16 worth of dividends paid out.
Chesnara was sold back in January of this year (2014) for £3.44, a price roughly the same as it trades at today. The motivation behind the sale was to bag a handsome 108% profit. Since selling there has also been dividends paid out totalling£0.19 that I have missed out on.
So both holdings are trading roughly where I sold them at (along with the market in general) and are currently yielding just over 5%. On the face of those simple facts I wish I hadn’t sold them.
One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute.
William Feather
I definitely consider myself to be an investor rather than a speculator.
I’d like to think that I am investing in small pieces of stable, profitable companies with a view to sharing in the future profits in the form of dividend income as opposed to speculating on future price gains. Unless the businesses that I invest in change dramatically then I should never really have a reason to sell.
How about you? What’s your typical holding period?
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