How do you guys go about setting an exit strategy? For me its all about time, cos I want to be in for 12 months to get CGT discount. Its worth it. For example, in July 03 - I bought AWC for $4.15 - 6 months later it was $6.50, but I didn't want to get out. By the time I got to 12 months ownership, it was down to $5.20, but I hung around til December 04 and got out at $5.94.
Now I made a much higher after tax gain by getting out at $5.94 in Dec 04 than I would have if I got out at $6.50 in December 03. However, one aspect that you guys have alerted me to is 'opportunity cost'. What's a tax problem when you can make more money elsewhere in the market.
And now to my new dilemma. Bought VSL in Oct 04 for 91c. Now $1.47. When do I sell? Do I set a stop at $1.20? Or should I stick with the time thing and regardless sell after Sept 05.
I guess the CGT dilemma isn't an issue if you are a share trader for tax purposes, but for the investors it is and the question is, how valuable is it and what kind of hit do you risk taking just to get it?