In light of what you shared, are you considering selling/trimming any of your holdings? If not, does that mean you consider them all undervalued in respect to an index beating return?
Hey Zack, yes I did trim a few and sell out of a couple positions recently. For a few of them, they were at points where I felt there were better opportunities in the market and my other holdings.
Do check it out in the paid articles “My biggest portfolio change” and “My 15 holdings and why”
Agreed! I always evaluate my current holdings as if I'm building a brand-new position.
The tricky variable is tax friction. Here in Germany, a ~26% tax on gains means selling a 2x winner instantly wipes out 13% of your capital.
When running my scenario models, the replacement stock needs to beat the original by roughly 2.6% per year over 5 years just to break even on that tax hit. So taking profits must be done carefully in times of (obvious) overvaluation but are absolutely necessary as outlined in your article!
Anyone living in countries with tax-deferred accounts (like IRAs or ISAs) consider yourself lucky!
In light of what you shared, are you considering selling/trimming any of your holdings? If not, does that mean you consider them all undervalued in respect to an index beating return?
Hey Zack, yes I did trim a few and sell out of a couple positions recently. For a few of them, they were at points where I felt there were better opportunities in the market and my other holdings.
Do check it out in the paid articles “My biggest portfolio change” and “My 15 holdings and why”
Agreed! I always evaluate my current holdings as if I'm building a brand-new position.
The tricky variable is tax friction. Here in Germany, a ~26% tax on gains means selling a 2x winner instantly wipes out 13% of your capital.
When running my scenario models, the replacement stock needs to beat the original by roughly 2.6% per year over 5 years just to break even on that tax hit. So taking profits must be done carefully in times of (obvious) overvaluation but are absolutely necessary as outlined in your article!
Anyone living in countries with tax-deferred accounts (like IRAs or ISAs) consider yourself lucky!
Thanks for sharing! Thankfully for myself, there are zero taxes in Singapore, which is good and bad.
Good for obvious reasons, bad because many tend to overtrade.
Great article! I’m just beginning my journey as an investor, and this was a topic I couldn’t find a satisfying answer to. This was super helpful!
Glad to hear it’s helped, Barbara :)
I think it shows that conventional wisdom should always be questioned and we should look at things from first principles.