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Wednesday, 14 August 2013

Is that investment paper gain so important?

At times, l wonder why would people want to invest and holding on to their paper gain? 

If my portfolio already running at 10% - 20% paper gain then is there any valid reason to keep holding on to it?  Is it meant for the next generation?  Then, is the next generation really so incapable of starting at ground zero?  l am certain there are some successful investors out there growing their wealth from ground zero.   So, it is good to divest away stocks that are already having more than 10% paper gain and re-investing on the proceeds.

Is keeping the 10% - 20% paper gain on the stock holding is to demonstrate one's ability of being a genius?  Will that kind of paper gain able to bringing food to the table for the family members?

Invest and hold only brings a sense of insecurity; e.g. if l divest away my stocks holding to achieve realized gain of 10% - 20% then l am faced with re-investment risk at higher share price levels.  If one's purpose is to invest and hold then why be bothered with paper gain and losses. 

Stock markets are subject to up and down cycle.  A paper gain of 10% - 20% of one's stocks portfolio will at one point of time turning into paper loss; touch wood.  Unfortunately it's the reality of stock investing.

6 comments:

  1. Multi-baggers start from 10-20% gain? No?

    ReplyDelete
    Replies
    1. You have achieved exceptionally well results being a Multi-baggers but there are many other successful investing style out there. I reckon every investors should try to stick to their investing / trading style that they are comfortable with. l do not like growth stock much; my preference is reasonably good dividend paying stock and l like to collect the dividends well in advance, if possible.

      Delete
  2. i always buy & sell too early leh. So very rare too get multi-baggers. You can't have the best of everything; or the best of both worlds. As long as i survive and prosper in the market, thank GOD already. Or thank your Lucky Star or no Lucky star, thank yourself then if you wish.
    Shalom.

    ReplyDelete
    Replies
    1. Not every success stories by others can be used; investment strategies should be "personalized". So, nothing really wrong with buy and sell too early. If this has becomes a habit it's still okay when at the end of the day you still survive and prosper in the market. You have been in the market so long already and have really experienced both extreme bull and extreme bear cycles; now who can beat that?

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  3. I guess it still depends back on the valuation of a company irregardless of the paper gain or loss you are holding. If you think the valuation is stretch then it is wise to sell but if the valuation is still undervalued even though I hv a 10 to 20% paper gain I will still hold. For eg im still holding to my neratel even though my paper gain amounted to nearly 90% and this is because I believe valuation is still fair.

    ReplyDelete
    Replies
    1. If l have a paper gain amounting to nearly 90% or equivalent to more than 6 years worth of dividends then l will divest it away. By doing this l have locked in the profit and the proceeds will be part of war chest to invest into bargain stocks when the stock market is correcting. Risk profile and investing objective of each investor is different. Good Luck!

      Delete

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