Thursday 6 March 2014

Exit Aviva (Portfolio Sale)

What are you waiting for?
One of our key monkey-brain investing weaknesses is loss aversion: behavioural tests show that this bias consistently causes us to make poor financial decisions.

I am not immune from this bias and I continue to try to find a way to deal with it - a way that 'goes with the grain' of my mental make-up rather than using sheer logical willpower.

However, for now the DIY Income Investor approach is just to hold on to losers in the optimistic hope that they will eventually come good.

Sometimes this works...

I don't think I need to introduce Aviva (LSE:AV.); most investors will be familiar with this UK insurance giant.  I have held AV a long time - since April 2007, in fact - and topped up in February 2010, again on the basis of the attractive yield then on offer and the apparently good prospects for the company.

But Aviva is a serial disappointer - and for most Income Investors, cutting the dividend is akin to investment apostasy - punishable by execution (I hasten to add - the 'sell' execution by your broker).

So, when the Aviva share price leapt over 7% this morning, putting my overall holding just into the black (finally), the decision was easy: sell!

[Sale price: £5.02.]

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.


  1. I also sold Aviva today but at a decent profit, having bought it more recently. For me the forward P/E and yield were no longer attractive enough. Aviva is a behemoth in a mature industry and is no growth stock. I had intended to sell yesterday and had I done so I would have missed today's bounce. I have recently started using limit sell orders to maximise the price achieved as the intra day variation can easily be +/- 1% even with no news. In this trade I set the limit price at 1% above the offer price yesterday afternoon hoping it would hit this level at some point today. In the event the share opened 8% higher this morning, triggering my trade and netting me a handy extra profit. A very simple trading technique for the slightly more patient investor, should be advocated more often IMO. Could equally reversed as a limit buy with the price set at 1% below the bid. Helps to offset the unjustified stamp duty somewhat.

  2. I bought Aviva as a recovery play last year, and sold before the results (missing out on the jump) at a profit of 28% plus dividend over ten months. Buy and hold is not always the best policy, and is too often used to avoid coming to terms with reality in the shape of poor decisions and lost opportunities.