|Another one for the chop...|
...it was the worst of times. (Dickens - A Tale of Two Cities).
Sometimes we end up doing the right thing for the wrong reason - and sometimes we do the wrong thing for the right reason.
When it works you need to acknowledge that you have been lucky; when it doesn't - just put it down to experience and try to learn from it.
Up to this morning I held two chunks of RSA Group (LSE:RSA) in two different brokerage accounts - both bought around the same time in February 2012:
- The best of times: my recent self-awarded 'best buy' was accomplished thanks to RSA's rights issue. The shares I bought have risen nearly 70% in value - that's over just two weeks!
- The worst of times: I only took up part of my entitlement, as I lost track of the closing date and ran out of time on my other holding.
With my new, harder-headed approach to selling I probably shouldn't be holding RSA at all - the yield is anaemic, following their aggressive dividend cutting and I'm showing a loss. My new stricter approach, to recall, is to consider selling when the capital loss is greater than 10 years' worth of current income. I was mainly holding onto it because of 'anchoring' - being fixated with the price that I paid for it.
But the rights issue has given me an the easy way out. By selling the holding that I added to I can exit at my average purchase price. As I said: doing the right thing for the wrong reason.
My other holding of RSA has a 'sell' indicator of 'just' -6.5, so I have not yet triggered my new 'sell' rule. So probably doing the wrong thing for the 'right' reason.
In any case, should I treat the two holdings differently like this? My defence is that I'm only human - with the handicap of a 'monkey' brain seething with biases.
"...it was the age of wisdom, it was the age of foolishness"
[Sale price: £0.946]
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.