Holiday from the Markets
What do you do when you're about to go on holiday but have a lot of share positions open?
That's a tricky one and a question I've been mulling over all week, as I'm just about to leave for a week's holiday in Ibiza. There are, of course, various options. I could:
- Close down everything, take profits, walk away and have a good holiday.
- Close the positions I'm most nervous about and leave the rest to run.
- Leave everything open and nip to the internet cafe once or twice a day to monitor and trade out if need be.
- Take part profits in a number of positions.
- Leave everything open, don't look at the market at all during the holiday and hope for the best.
I thought I'd ask some of the excellent traders on my discussion forum on the ADVFN PBB Board on what they would do. There was a good mix of advice.
The Blackmamba said:
"I always close all my positions before going away, peps and all, but I am a shorter term trader than you. One idea is to set mobile alerts using the ADVFN alerts service. Work out your stops before you go, set the alerts, then close if they get hit."
Meanwhile SamGG contributed this:
"For anything that's in profit, take at least part-profits on anything that looks dicey - anything looking seriously dicey, take profits on the lot. Ditto for anything that's in loss and set stop losses on the rest. And have a great holiday!"
MT GLASS had this to say:
"Depends how uncomfortable you feel Robbie. No point spoiling your holiday if being away from the screen really is going to make you nervous when there is such a big sum in play.
Long ago, I was asked the same question by a friend and did a calculation of what it would cost to sell everything, and buy back after - allowing for costs (broker fees, stamp duty, spread) and checking for CGT and divi losses. It worked out at just under 4 percent of the overall portfolio value (broker fees were dearer then).
She decided to do just that: regarding the 4 percent cost as a sort of insurance premium to guarantee against any bigger loses than that while away. Avoiding the risk of a crash is far more important than missing out on any gain that may occur. The 4 percent sacrifice compared very favourably with the gains she had already accrued. And even without a crash, the markets could slip more than 4 percent anyway in the time she was away."
Meanwhile, PAULISMYNAME wrote this:
"Make a distinction between what stocks you regard as a trade and what you regard as an investment. Close all trades without exception. Set stop loses on profitable investments. Close doubtful investments, as there is always another day. Consider buying a put option "out of the money" (total risk to equal option cost) on the FT100/Dow etc, dated expiry December for portfolio insurance, and be prepared to write off the cost of the option as insurance (in the same way we insure our houses for fire etc)."
There were many other excellent comments, all of which I've considered.
So, what have I decided? Well, actually, given the huge costs of buying back I've decided to take my chance as I feel I have a very strong portfolio. And I don't think the odd visit to the internet cafe in Ibiza to check my positions on ADVFN from time to time will spoil my holiday. At least I can take action if I really need to.
Is this the right strategy? I'll let you all know when I'm back and whether I ended up trading out of any positions while abroad. Anyway, I hope I've given some food for thought for those of you with share positions who are about to go on holiday!
Meanwhile, my portfolio has been shooting up: recent value company buys have proven to be very profitable! These include VP Group, Broadcastle, Brammer, and Costain - a bunch of solid companies that I believe will make me wealthy over the next year!
Anyway, must catch the plane now and say, "Hola!" to Ibiza!