I’d prefer to hold shares forever…
I rarely sell a stock. Come to think of it, I am struggling to remember what the last one I sold was… without having to log in to my broker, I can’t really remember! It could have been Tesco, which was sold in the Spring of 2013. This is because I’m a buy and hold investor. Yes, I am that boring. I have stocks that I’ve had since the very beginning of my investing journey – such as Marston’s, and a few I probably should’ve held on to, such as BT, as well as totally new stocks which I just purchased (I’ll update you soon, I promise).
If you’re a buy and hold investor, when are you supposed to sell?
I just had to sell this one. In fact, I should have sold it a lot sooner, but despite its problems, it is still generating a decent yield. I decided to sell Royal Mail. Royal Mail Group (LON:RMG) was purchased when the government sold part of its stake in the national mail carrier (most people think it’s 100% privatised, not true!) in the Autumn of 2013. I knew if I could get my hands on these shares, the price would skyrocket. We scraped together as much money as we could at the time; that wasn’t much, as we knew they’d go on sale soon after our first baby was born. A third of the money was savings for the baby. Anyway, we managed to get what everyone else got – £750 worth. They went on sale at £3.30 and soon went up to just over £6. I sold the baby’s portion when they hit £6, and kept ours.
The plain fact is, that I didn’t really know at the time what I would’ve done with the money if I’d sold our portion of the shares too. Baby’s portion was fully planned out. I had a vision for his future and a selection of funds that I would swap the money into. Because I didn’t have a vision for our own investment, it just kind of sat there in our account, although we have received dividends which were reinvested. The only reason I bought them, was because I had the strongest hunch in the world, that the price would balloon. So, I should have sold everything when I thought it was at the top. I was right here twice, but having only sold the baby’s shares, I was lazy. That laziness means that I sold today at just over £4, still a neat profit, but it could’ve been a lot higher.
So, these Royal Mail shares were not ever meant to be a buy and hold investment. I know others who have no intention of selling, although I do not hold much faith in the shares. The mail carrier has suffered on and off with many problems including strikes, pension deficits, loss of major contracts, and the threat of cheaper carriers (gaining market share in the cities especially).
If you’re a buy and hold investor, then Royal Mail may never have been a realistic purchase for you, although the legendary investor Neil Woodford thinks otherwise. But I am not Neil Woodford. He has a reputation for basically being the best manager in the UK, from his time with Invesco, whereas I have no reputation whatsoever. There are plenty of stocks in Woodford’s portfolio that I like, such as BAE Systems, but plenty that I do not, such as the several tobacco companies that he holds. They account for a whopping 16.74% of his total portfolio, but perhaps the 21.45% he has in health care more than balances these out 😉 – I don’t actively invest in tobacco for moral reasons.
Don’t sell if you don’t have to
I wouldn’t have sold, except I felt that I had to. The dividend is around 4.74%, but I have a terrible feeling that things are not going to get much better for Royal Mail. I hope I’m wrong, but I don’t really expect that they will be able to grow their dividend that well over the coming years. This is not something that puts a smile on my face and makes me think BUY BUY! It makes me think, I’ll put the money elsewhere instead, thank you very much.
Do you have any opinions about RMG? Or do you have any stocks that let you down? Let me know, leave me a comment below. Cheers!