Minimum time to hold a stock?

3rd Feb by N0vice1Nvest0r

10 comments 730 reads

I'm a novice investor, I've learnt so much in 3 years but theres still a long way to go until I consider myself an average investor. I like to pick stocks similar to Michael Burry. Cash rich with good profit and as learnt from "the naked trader" a negative net debt.

I try to buy the stock I like when the stock has dipped, and when there seems no issue fundamentally. However this isn't always the case as some stocks just push on and on. I too believe that time in the market can also be more beneficial, than timing the market.

My question is how long is the minimum time you hold a stock for? Mine is sometimes when a stop-loss is triggered, however if I believe in the stock I buy the dip.

I recently dumped my Kenmare Resources (LON:KMR) stock due to wanting to profit this year, as in the 2 months ive had it, it's dumped 25%. Plus with the help of the community about the short term future being tough, I dumped it. On the flip side ive added to to my Jupiter Fund Management (LON:JUP) and Arbuthnot Banking (LON:ARBB) but I keep a watchful eye out for other fundamentals.

So how long do you give your stocks to come good, or bottom? Or are you selling when certain news hits and "x" price hits? I've heard some just review every 3-6months.

Any help/tips will be greatly appreciated. Hoping to find more B.P. Marsh & Partners (LON:BPM) and Knights group (LON:KGH) from last year.

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XTR

4th Feb

I try to hold as long as the stock is moving up or consolidating, and rely on a stop loss to protect gains or limit losses. If the stock becomes very extended or valuations become high then I'd be tempted to take profit or exit the position. I would recommend you get 'The Art of Execution' by Lee Freeman-Shor, it's quite an easy read and covers the pros & cons of different selling strategies for both winning and losing positions.

Ian

N0vice1Nvest0r

Legend, ive read so many great investing books.

This will be next!

ShoeShineBoy

Agreed. Excellent book. Not just to learn about the traits of successful investors but to understand human behaviour.

The line that goes something like this is what I really recall from that book : "On days when I met with connoisseurs, I sometimes struggled to get out of bed". Cutting losses is important. But being able to run winners is what turns average investors into great investors. If it was easy, anyone would be able to do it :-)

SSB

I took profit on KGH and BPM. they run on 20% since...!

Effortless Cool

"negative net debt" is better expressed as "net cash"!

But to try and answer your question, I tend to hold indefinitely, so long as the story remains intact. However, I need to apply a stronger sell discipline when the story remains intact but the market seems to be overvaluing the share.

Hi N0vice1Nvest0r,

nothing wrong with taking a profit, always better than a loss :-)

Again, going back to the Lee Freeman-Shor book, he talks about the best investors cutting losses quickly. But also allowing profits to run and dipping into profits by selling just a few shares every now and then. Not selling complete holdings but just partial holdings. LF-S: like taking a good bottle of wine out of the cellar to enjoy whilst the remainder continues to age / increase in value.

Best wishes.

Guybrush

The minimum time can vary from minutes for day traders to decades for buy and hold investors. However, as you like "cash rich with good profits" shares, that sounds like you should be selling on the first sign of a profit warning.

I myself like my charts, which I scan through dozens of daily, using the mini-charts based on my screens. Once I have found the ones that have setup correctly, I then go into the Stock reports for a "health check", and even better if it is green lit by the team on SCVR for peace of mind. I will then hold as long as there is no technical violation.

I've recently bought into Luceco (LON:LUCE) and Genuit (LON:GEN, both having formed a year long base and on the verge of breaking out(upwards) or having just broken out, and both have high Quality ranks. Also, Luceco was recently "green" lit by SCVR. Knights group (LON:KGH) is also in the same boat as the other two and I was considering buying some, but got no spare cash unfortunately ( I would be buying this not selling as you mentioned below).

Since you are a fan of the Naked Trader, in his recent interview with Megan, his preferred rank above all others is the Quality rank - this rank assesses profitability among other factors. You may want to check out the video for more details.

Thanks guys for all the input!! Like I say I'm still a novice and open to learning from my mistakes. I like looking at the charts too, boxing out target areas to buy. However the amount of stocks that just run and run and don't hit my buy targets is frustrating.

19th Feb

brilliant book!! May thanks!!

Minimum time to hold a stock?

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N0vice1Nvest0r

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