CIG sources indicate that it makes good business sense to sell your winners. Selling is the only way to make a profit or capital gain. Don’t hang on to a good thing to long. Selling also frees up cash to invest in other up-coming shares.
Always have a firm exit strategy when first you purchase a share. Allow yourself to adjust your plan if prices move in your favor, but if not, be ruthless and ensure that you have protective selling orders in place.
CIG has learned that one should only purchase the shares one wants. Stockbrokers earn their money on turnover, they more they sell the more they earn. Unscrupulous traders may sell you shares just to generate commission, and bear in mind that yesterday’s top performers are not necessarily tomorrows.
Aim to invest in high yields, not capital gains. Earn real dividends that reflect in your bank account, unlike capital gains which may never materialize. The path to real wealth lies in compounding small gains over time.
One CIG source suggests that you should immediately fix or dump shares that are slowly loosing value rather than keep them in the hope that they may in time come around, and risk ending up with a major loss.
Always aim to purchase value. It is a lot harder to make gains on shares standing on earnings multiples of 40 than it is on those shares in the region of 10.
Start investing early and stay invested as long as possible. CIG believes a hands-on approach to your portfolio is always best, manage your portfolio and remain in the market without missing an opportunity to invest.
These simple, common sense guidelines haven’t changed over the years and should stand you in good stead in the coming year.
