Thursday, 10 April 2014

Spring Cleaning, Part Deux (Portfolio Sale)

If you missed Part One - I am doing some major tidying-up on the DIY Income Investor portfolio by clearing out some investment 'dead wood'.

But the funny thing is: it's only 'major' in my head - the sales don't change anything in the portfolio, they just accept the paper losses incurred by bad decisions in the past.

Today's sale is Lloyds Banking Group (LSE:LLOY), the other main 'legacy' holding that pre-dated this blog. What a disaster owning this has been: originally it was perceived as a high-yield share of a stalwart 'safe as houses' banking institution; now Lloyds has become a taxpayer-owned near-fatal financial crash victim, recuperating but still not up-and-about.

Why I didn't see the signs - and why did I buy even more, in the hope of a recovery? Oh well, at least LLOY had the decency to stage a major recovery last year and I have only lost half the money I spent on it. Had I sold a couple of months ago (when there was some excitement about the potential recommencement of dividends) I could have done even 'better' - but that brief recovery was short-lived.

These two sales mean that now all my portfolio holdings generate some income - which should, after all, be the basic rule for any DIY Income Investor. That's not to say that all is peachy - there are still some loss-makers to deal with. The next phase of the portfolio clean-up is to begin to implement the stricter 'sell' criteria: the indicator I'm trying out is based on when the capital loss is more than 10 years' worth of current income.

[Sale price: half my original chips]

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 comment:

  1. Oh brother, you ain't the only one! The Lloyds we inherited years ago are worth about a sixth of what they used to be, and the RBS at an 86% discount to purchase price are only a smidgin up from your Sisyphean boulder... I still like stop losses to try to calm my loss-aversive anxiety, although I realise that many people feel that they somehow insult their superb market judgement - "No, no. Just a temporary setback. So it's fallen 50% - I should buy some more because I know I was right to buy it the first time....." Such a dangerous philosophy, speaking from over-cautious old age.. I think I might try your new year Resolution, but watching it carefully - the price has improved slightly from your purchase date, although it seems to have had a pretty depressing six weeks. On verra!