I buy growth shares with the aim of holding through thick and thin, to give them time to realise their full potential. But is this the right strategy? Instead of buying and holding, a different school of thought suggests investors sell their winners every year or so, and reinvest their gains in some of their worst performers. This works on the assumption that stock performance is cyclical.
Successful stocks tend to be expensive, poor performers cheaper. Selling high and buying low is every investor’s dream, isn’t it? Time to buy, hold or sell? Also, success tends to come in waves. I’ve seen this with my three best performers over the last year: private equity specialist , insurer and outsourcer .
As my table shows, they’ve had a brilliant run lately. I also suspect they may struggle to maintain their momentum. My three worst performers have had a dismal few years.
The longest I’ve held any of these stocks is just 15 months. So luckily I haven’t lost 96.94% of my original stake, as I would have done if I’d bought ( ) five years ago.
At the same time, I’m not sitting on a 198.04% gain, as I would with 3i Group. I only bought Aston Martin a month ago, and I’m already down 30%.
I rarely put money into like this one. Basically, I had a small amount of cash left in my portfolio, and decided to have a flutter. I knew what I was getting into.
On 20 September I wrote that , going bust seven times since it was set up in 1913. Investing is a long-term game I took a cha.