Moving gradually into Cash

It’s hard for me to sell winners. If I sell while I still can, I’ll definitely book my cash profits. But if I don’t sell, when the crash comes, all my paper profits will be wiped out, if I’m lucky; if not, it’s very possible to turn into paper losses. Losses from a crash of the same magnitude as last one, i.e., 2009 crash, took years to recover. I’ll still be paid with dividends while holding them, but I will lose one of the opportunities of my life time to buy at much lower price and the cost basis does matter for my portfolio.

What if the market goes much higher from here? It can happen, but the probability is very small, in my humble opinion. I could be wrong though and that happens a lot. 😉  We’ve had five years of bull market, it can’t continue this path indefinitely, based on history, the tide should and will turn. I read many books concerning history in my younger years and it appeared that history does repeat itself.

At this moment, the benefit of selling is greater than holding or buying for me. After this logical reasoning, I’ve decided that I’ll gradually sell my stocks that are above water, stocks that have short dividend payout history, stocks that will get crushed during a downturn, i.e., high beta, and stocks that are overweight in my portfolio. Also I’m managing too many stocks right now, it’s good to reap the profits and identify a smaller list of stocks to manage. Hopefully, I’ll get myself well-positioned to take advantage of next crash.

To kick this plan off, I sold these stocks today:

In Roth IRA:

  • I sold 6 shares of PBI for 25.25 per share. Cash relieved $157.69 – Acquisition cost $74.03 = Profit $83.66.
  • I sold 10 shares of VVC for 36.62 per share Cash relieved $377.84 – Acquisition cost $376.52 = Profit $1.32. I consider this a good stock and I like the yield, but I bought it at a price that was too high. I’m unloading it and will buy it back when the price drops.

In Traditional IRA (W):

  • I sold 9 shares of PBI for 25.38 per share. Cash relieved $251.01 – Acquisition cost $120.5 = Profit $130.51. PBI is an interesting stock. I bought it at deep discount. With postal industry being on its deathbed, to my surprise that the price climbed back to this level. Since I don’t understand its business quite well, it’s time to take the profit. I’m happy PBI has worked well for me.

The tide turned quicker than I could sell them. After I sold the above stocks, the market turned red. I still have many sell orders to be executed.

Then I turned around and bought the following stocks:

In Traditional IRA (M):

  • I bought 10 shares of K at $57.28 per share
  • I bought 10 shares of WGL at $37 per share

In Traditional IRA (W):

  • I bought 100 shares of T at 32.01 per share

It was so tempting to buy in a down market. But I really need to stick to my plan and stop buying. The trend of the charts is going downhill everyday. I need to take emotion out of this and focus on the technical.

 


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