Wednesday 9 April 2014

Spring Cleaning (Portfolio Sale)

It's that time of year: the sun is shining, the daffodils are flowering and we feel that, finally, the winter is over. Coming out of the dark, cold (and wet!) months gives us renewed energy to tackle those jobs that we have, perhaps, put off for too long.

Like cleaning up the dead undergrowth of the DIY Income Investor portfolio.

The first bit of rubbish to be sold off is Royal Band of Scotland (LSE:RBS), which to be fair was a 'legacy' holding - bought before this blog came into being.

This is probably the worst investment I have ever made - all the more so because I kept buying and buying - and then didn't sell when I should have. I won't go into the sad details - as they are of little interest to anyone not closely involved but it accompanied a dramatic fall from grace for this originally high-yielding banking institution.

Holding onto this loss-maker for years and years has produced little improvement and overall I have managed to lose over 90% of my original, substantial investment.

There were several decision points when I could have mitigated this loss: some perhaps difficult to analyse (like the banking crash), others perhaps easier (like throwing good money after bad by participating in rights issues and over-concentration). The biggest mistake was not selling at a loss before the loss turned into a complete rout.

Ah well, we grow older and wiser.

But with a few taps of the keyboard that is all wiped away. The loss has already long been accounted for in the portfolio spreadsheet, so there is no real change to performance or asset mix. All that was required was a rearrangement of mental biases.

It wasn't as painful as I thought it would be...but it is only the beginning: where did I leave those rubber gloves?

[Sale price: peanuts]

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.

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