Australian (ASX) Stock Market Forum

Whether to sell shares and stress less?

ENP

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I'm hoping you have all been through something similar and can help me out with this one.

I bought some shares in a smaller cap company about 3-4 months ago. I have taken out a small loan of 15k to aid in my purchase of these. Since I work at a bank, the loan is only charged at the floating home loan rate, althogh it is classified as a personal loan.

Everything looked rosy when I bought into the shares, they had a good history of growing their financials and the balance sheets and ROE are quite good.

The price of the shares has hovered around my purchase price since purchase.

However, whilst doing more and more research into the company and it's prospects for the future, there are a few things that have begun to worry me quite a lot. This, combined with the fact that I'm not as bigger fan as I originally thought about being in debt has me very worried. I'm pretty stressed out about the whole process, the worry of this keeps me up at night and makes me very very stressed out during the day.

I keep running pro's vs con's of whether I should sell and financially, it makes sense to use the debt and leaverage my exposure to the stock, but on the other hand it is causing me lots of worry about it's future and whether the decision to take out the debt and invest in the company was a good move.

I hold two other large cap stocks and am not worried about these at all and am happy to keep them.

Please help!
 

tech/a

No Ordinary Duck
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Re: Whether to sell shares and stess less?

Pretty simple

Sell the stock
Then develop an investment strategy
Which incorporates risk planning.

So first remove the stress and put yourself in
A place where emotions are not making decisions.

Taking out a loan to trade in this market isn't
The smartest thing to do at your stage of investing.
( The gut investment strategy ).
It's pretty common.
 

springhill

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Re: Whether to sell shares and stess less?

ENP, you can't put a price on peace of mind mate. I have been there and it's not a nice place.

If you are starting to waiver on the absolute surety of your research it's time to get out and look at the positive that your investment is still around price of purchase.

If borrowing was the easy way to fund an investment in the stock market, everyone would be doing it.

Best of luck.
 

skc

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I keep running pro's vs con's of whether I should sell and financially, it makes sense to use the debt and leaverage my exposure to the stock, but on the other hand it is causing me lots of worry about it's future and whether the decision to take out the debt and invest in the company was a good move.

Please help!
It seems like you know the answer already and it's really not that hard a question! You are not in a major loss, you are stressed about your situation, the only reason to be in the stock is greed....

Simple when you think about it.

You can't pay me enough to sleep well at night (I was up 3 hrs from 2am last night patting my baby).
 
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ENP, whenever I find myself weighing up pros and cons, it's time to dump stock. Other than that I agree with what everyone else has said already.

btw, what's the stock code?
 

Logique

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ENP, preservation of capital is rule 1, and not getting emotionally attached is rule 2.

Don't be too proud to bail and take a loss if you have to, it's all part of the learning curve. Successful traders do this.
 
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From a fundamentals point of view, if the reasons you initially bought into the stock are no longer valid (i.e. you've since realised it doesn't have a competitive advantage/has more debt than you thought/don't like management/whatever) then you should be selling the stock anyway...
 
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Pretty simple

Sell the stock
Then develop an investment strategy
Which incorporates risk planning..
ENP, preservation of capital is rule 1, and not getting emotionally attached is rule 2.
Don't be too proud to bail and take a loss if you have to, it's all part of the learning curve. Successful traders do this.
Read and learn. And follow your strategy.
 
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Agree with all of the above ENP, speaking from recent experience in May, when the market made its most recent highs. I sold a lot of stock to get my margin loan down to zero. Modest profits only, but no stress of carrying loans now.

Even with one stock which I sold at $3.70, which then made it's way down to $3.22 and now back up to $3.80 plus, I'm pretty relaxed. I know it's a good stock and will sit on the sidelines waiting for my chance to get in, buit not paying interest in the meantime.

The bottom line for me (and it literally is about the bottom line). Is the return on the SP has to match your cheap loan interest rate of 6% for you to keep standing in the same spot. So if you can't see it doing that, and the SP is at the same point in 12 months, then you're 6% behind for having paid the interest. Perish the thought if it was lower.

Most of the experts say the stock market, generally speaking, is going sideways for the next few years. So a loan is going to put 6%plus percent pressure on you to perform, pick the lows, sell the highs etc. So unless the dip goes to March 2009 levels (and it might), the loans won't be worth the effort.
 
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Company is EMB Embelton Ltd
I'd be wary of being in this stock solely due to it being very illiquid. If you are even thinking about getting out, get out.

Just keep in mind that it's so thinly traded that your sell order will probably have a big effect on the price (depending on the size of your holding). If you get any kind of good news, that would be a great way to sell off your holding.
 
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Re: Whether to sell shares and stess less?

Pretty simple

Sell the stock
Then develop an investment strategy
Which incorporates risk planning.

So first remove the stress and put yourself in
A place where emotions are not making decisions.

Taking out a loan to trade in this market isn't
The smartest thing to do at your stage of investing.
( The gut investment strategy ).
It's pretty common.
+1

You should have a trading strategy that you stick to religiously, regardless of price movements. Including entry points, stop losses, trailing stops and so on. If the fundamentals that made you invest to begin with are still there then stick with it. If your new findings contradict your initial thoughts then perhaps get out. Think long and hard though, as if you are simply putting a negative spin on recent news because you are stressed then there may be no reason to exit yet.

Set yourself a stop, a point at which you are happy to lose x amount on your trade. If it hits that point get out that day, if not the next, if it doesn't, hold until you're happy to take profits. This then removes the stress for you. If you have allowed yourself a loss of $200 on the trade for example, you can sleep easy knowing that that amount is the most you will lose(give or take, unless something major happens it shouldn't gap too much over night), and at the same time you still have the potential for your trade to go where you initially thought it may.

You obviously believe the company had a fair chance of taking off. As far as I'm aware most small caps wouldn't pay dividends? So you need your stock to go up enough that it covers your repayments in the long run.(I know you can negative gear, but I personally don't like the idea of the whole leveraging yourself in that sense.)

jmo
 

So_Cynical

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EMB looks like a great stock to be in, its just from my perspective as a "low cost averager" it looks like you paid to much (3 or 4 months ago) and now your stuck in a great stock at the wrong price...now if you concentrated on paying the lowest price this simply would not of happened.

Develop some rules and a comprehensive strategy....buying ANYTHING after a substantial share price increase is dangerous when combined with the current market conditions.
~
 

Attachments

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..........However, whilst doing more and more research into the company and it's prospects for the future, there are a few things that have begun to worry me quite a lot. This, combined with the fact that I'm not as bigger fan as I originally thought about being in debt has me very worried. I'm pretty stressed out about the whole process, the worry of this keeps me up at night and makes me very very stressed out during the day.

I keep running pro's vs con's of whether I should sell and financially, it makes sense to use the debt and leaverage my exposure to the stock, but on the other hand it is causing me lots of worry about it's future and whether the decision to take out the debt and invest in the company was a good move.

I hold two other large cap stocks and am not worried about these at all and am happy to keep them.

Please help!
Decide what is important to you; it is money or health? And once you make the decision, just do it and don't look back.
 

Julia

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Decide what is important to you; it is money or health? And once you make the decision, just do it and don't look back.
+1. We can only ever make the best decision with what we have at the time.
When you bought those shares, you were convinced it was a valid decision.
From what you say, the fundamentals have changed.
That alters the validity of your original decision now.

The level of anxiety you're experiencing should tell you what to do.
As Judd says, don't look back when you make the decision to sell. There will be hundreds of similar situations throughout your life. Make the most rational decision you can at the time and move on.
 
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