Author Topic: How long do you hold onto stocks? Is there a rule of thumb?  (Read 1911 times)

dummy

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How long do you hold onto stocks? Is there a rule of thumb?
« on: January 08, 2018, 12:31:42 AM »
I'm a slow learner and have made some pretty good gains on my stocks. I've only had them about a year and half.  This is my second time ever investing in the stock market and I was burned bad the last time when I was young.

It feels good to finally make a little money.

Is there a rule of thumb, or do any of you serious investors have any tips for holding onto stocks?  I understand the tax implication when stocks are bought and sold with one year, but I'm past that penalty.

I assume most would agree to keep them as long as they are performing, as long as the money is not needed.  Is it that simple?  Do you guys watch other investments to roll some of your gains into those areas to diversify, and try to beat your current rate of return? 

Sorry for the beginner questions.

Llewellyn2006

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Re: How long do you hold onto stocks? Is there a rule of thumb?
« Reply #1 on: January 08, 2018, 01:01:36 AM »
It depends. If I think they are a solid long-term dividend generator or have some long-term potential then I'll hold onto them for years, maybe indefinitely. But I've also had a couple where I had a very good run and thought it was worth taking the (very healthy) profits (Telstra and Qantas - I'm in Australia) and on those two I did exceptionally well.

But.................buying individual stocks is frowned upon on here and most people just recommend index funds and I assume they just buy 'em and hold 'em forever.

Bottom line, you'll never go broke by making a profit but if you think there's something to be gained by just holding on to them, then that's fine as well.

Frankies Girl

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Re: How long do you hold onto stocks? Is there a rule of thumb?
« Reply #2 on: January 08, 2018, 01:09:41 AM »
Most folks on here (not all tho) are of the "buy and hold forever" variety. This goes hand in hand with the idea of being an index investor. Which means we buy broad market funds and then hold them forever, through all the dips and rises.

I do not buy individual company stocks. I don't give a rat's ass about chasing high returns and worrying over the daily pricing and whether I made a poor move here or should have sold out there. Slow, steady and boring is awesome. So that's why index funds are my cup of tea.

You can sell if needed, but you can also take capital gains/dividends (if there are any) as cash.

As I am FIREd (I no longer work at all and all expenses are paid out of my investments) I sell off funds periodically, but also do take out dividends/cap gains as cash from my taxable brokerage account. I also let my tax deferred accounts reinvest the cap gains/dividends so mostly I end up slowly growing the amount of funds I hold, as the reinvestments end up being higher mostly.

The rule of thumb is to figure out how the market actually works, then do your IPS, figure out your asset allocation and stick to the plan going forward.


Read Jim Collins' stock series to get a great understanding of how this stuff fits together. Check out his site or get his book (based on the site). It is absolutely one of the best, easy to understand guides I've ever read.
http://jlcollinsnh.com/stock-series/

Check out Bogleheads site for any possible question you could have regarding index investing.

The following are the steps I took:

1. Wrote up an investment policy statement to figure out my goals and plans. This is my blueprint for what goes where, why I do A or B if this or that happens, where I want to go in the future, and how I'm going to get there.
https://www.bogleheads.org/wiki/Investment_policy_statement

2. Figured out my asset allocation (AA). This is based off of how much risk/volatility I felt comfortable with and set up my portfolio to reflect my AA (which would also include any real estate).
https://www.bogleheads.org/wiki/Asset_allocation

3. I then took a look at what I held where, sold off everything that didn't match up with my goals in my IPS (I decided I was going to be an index investor holding only 2-4 total mutual funds across my entire portfolio, YMMV). I built a lazy portfolio and I am quite pleased. https://www.bogleheads.org/wiki/How_to_build_a_lazy_portfolio








soccerluvof4

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Re: How long do you hold onto stocks? Is there a rule of thumb?
« Reply #3 on: January 08, 2018, 03:33:06 AM »
Like Frankies Girl or from what I believe she is saying I too don't  own any stocks unless in an index fund. Now if you own stocks just because you got tips or felt something was going to happen whatever... If you over 100% on gains take your profits and play with house money would be my suggestion with this Market run-up and then put a trailing stop on, a tight one.  If you don't have those kinda gains and you want to preserve your gains put a stop loss 5 or 10% below the current trade price in or a trailing stop so you can preserve your gains a dollar or two depending on the price of the stock and how much it usually moves. Preservation is the name of the game! The mere fact that your asking that question not to be mean is concerning that you are more perhaps lucky and that will eventually most likely run out. This has been an easy market to be lucky in BUT its like Vegas still a gamble and the house will eventually take it away if you leave it out there long enough.

Mighty-Dollar

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Re: How long do you hold onto stocks? Is there a rule of thumb?
« Reply #4 on: January 08, 2018, 04:14:05 AM »
Quote
How long do you hold onto stocks? Is there a rule of thumb?
This very question is why I stick with broad market index funds. I ponder selling and paying capital gains taxes. I just rebalance if needed.

Retire-Canada

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Re: How long do you hold onto stocks? Is there a rule of thumb?
« Reply #5 on: January 08, 2018, 07:05:02 AM »
Is there a rule of thumb, or do any of you serious investors have any tips for holding onto stocks? 

Sorry for the beginner questions.

I buy investments I want to hold for life and then I only sell when I need money to live off of. Read the JL Collins stock series that was posted above.

wenchsenior

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Re: How long do you hold onto stocks? Is there a rule of thumb?
« Reply #6 on: January 08, 2018, 08:55:09 AM »
Is there a rule of thumb, or do any of you serious investors have any tips for holding onto stocks? 

Sorry for the beginner questions.

I buy investments I want to hold for life and then I only sell when I need money to live off of. Read the JL Collins stock series that was posted above.

This. 

I would consider buying individual stocks as 'gambling' or recreational money that I could afford to lose.  That is entirely different from the money we invest to grow over time and support our retirement. ETA: Our portfolio is entirely in index funds, covering broad sectors of the market.
« Last Edit: January 08, 2018, 08:56:43 AM by wenchsenior »

Scandium

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Re: How long do you hold onto stocks? Is there a rule of thumb?
« Reply #7 on: January 08, 2018, 11:57:11 AM »
I assume most would agree to keep them as long as they are performing...

You should sell your stocks just before they stop performing, since everyone else will be doing the same thing.

SwordGuy

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Re: How long do you hold onto stocks? Is there a rule of thumb?
« Reply #8 on: January 08, 2018, 07:15:55 PM »
I assume most would agree to keep them as long as they are performing...

You should sell your stocks just before they stop performing, since everyone else will be doing the same thing.

You forgot to put that last comment in sarcasm font...

SwordGuy

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Re: How long do you hold onto stocks? Is there a rule of thumb?
« Reply #9 on: January 08, 2018, 07:17:51 PM »
How long do I plan on holding my stocks?

They'll have to pry them from my dead, cold fingers.


Ok, Ok.  Maybe not that extreme.  But I hate the idea of selling anything I've saved. 

dummy

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Re: How long do you hold onto stocks? Is there a rule of thumb?
« Reply #10 on: January 08, 2018, 10:10:48 PM »
Appreciate the info, everyone.