One of the reasons for writing this blog is to force myself to think a bit more before making investment decisions. After all, if I make bad decisions, they will be there for all the world to see.
The same thing is true about New Year Resolutions - if you don't make them public they are easy to forget. (I made some in January 2012 - but times have changed since then!)
But that's not the point. I'm selling a lot this year: that's not 'buy and hold' is it? Still, when the money's on the table, it takes a lot of willpower not to grab it - and, for better or worse, my willpower has limits.
I bought British life insurance takeover specialist Resolution two years ago (hence Two-Years'-Resolution, sorry!) and reviewed it just over a year ago - deciding to hold onto it despite some poor performance.
It's been doing nicely since then. When my 'sell' indicator started flashing (capital gain > 5 years' income) I decided to review whether or not to hold onto it any longer.
Look at the facts:
- capital gain: 46%, equivalent to over 5 years' worth of the current dividend
- dividend yield: still a hefty 6.1%
- but the dividend cover has fallen dramatically to 0.9 and is forecast to be only 1.2 next year
What would you do?
Resolution may well have turned the corner and continue to grow its share price. Alternatively it may have to trim the now-generous dividend. Ultimately the question I asked myself was: "would you buy this today?"
The answer was "no", so I have sold it.
[Sale price: £2.38]
I am not a financial adviser and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.