𝐖𝐚𝐫𝐮𝐦 𝐞𝐬 𝐒𝐢𝐧𝐧 𝐞𝐫𝐠𝐢𝐛𝐭, "𝐅𝐞𝐡𝐥𝐤ä𝐮𝐟𝐞" 𝐦𝐢𝐭 𝐕𝐞𝐫𝐥𝐮𝐬𝐭 𝐳𝐮 𝐯𝐞𝐫𝐤𝐚𝐮𝐟𝐞𝐧

Time and again, I read about users who have admitted to making a bad purchase (great) but only want to part with it as soon as they can do so at a profit (not so great). In this article, we will look at why this is nonsense and why bad purchases should be sold as soon as possible - regardless of whether they are profitable or not. In this article, I'm talking about investment A, which you want to sell, and investment B, which you want to buy.

𝐖𝐞𝐥𝐜𝐡𝐞 𝐆𝐫ü𝐧𝐝𝐞 𝐠𝐢𝐛𝐭 𝐞𝐬 ü𝐛𝐞𝐫𝐡𝐚𝐮𝐩𝐭, 𝐮𝐦 𝐞𝐢𝐧𝐞 𝐈𝐧𝐯𝐞𝐬𝐭𝐢𝐭𝐢𝐨𝐧 𝐳𝐮 𝐯𝐞𝐫𝐤𝐚𝐮𝐟𝐞𝐧?

Certainly many. But here we are mainly looking at two situations:

1) The investment case of A is no longer correct. For example, there are new findings about a company in which an investment was made that significantly reduce the potential returns. Another example would be an investment in a sector ETF for which the growth prospects have deteriorated. Or personal preferences have changed, e.g. because the risk in the portfolio needs to be reduced. In short: the reason why you invested in A is no longer valid. You want to get rid of A because it no longer fits into your portfolio.

2) A new investment case B has emerged that fits better into your strategy. So the investment case for A is still intact, but there is another investment opportunity that fits even better into your portfolio. For example, because you, as a risk-averse investor, have previously held a blockchain ETF, @stefan_21 but GetQuin has now shown you how you can easily hold Bitcoin yourself and you think the potential returns here are higher.

In purely rational terms, an investment is reallocated because another investment promises a higher return or a lower risk. As soon as you realize this, you should also reallocate.

𝐉𝐚 𝐬𝐜𝐡𝐨𝐧, 𝐚𝐛𝐞𝐫 𝐦𝐞𝐢𝐧 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐢𝐬𝐭 𝐣𝐞𝐭𝐳𝐭 𝐬𝐨 𝐬𝐭𝐚𝐫𝐤 𝐠𝐞𝐟𝐚𝐥𝐥𝐞𝐧, 𝐝𝐚𝐬 𝐰𝐢𝐫𝐝 𝐬𝐢𝐜𝐡 𝐬𝐜𝐡𝐨𝐧 𝐰𝐢𝐞𝐝𝐞𝐫 𝐞𝐫𝐡𝐨𝐥𝐞𝐧. 𝐖𝐚𝐫𝐮𝐦 𝐧𝐢𝐜𝐡𝐭 𝐧𝐨𝐜𝐡 𝐦𝐢𝐭 𝐝𝐞𝐦 𝐕𝐞𝐫𝐤𝐚𝐮𝐟 𝐰𝐚𝐫𝐭𝐞𝐧, 𝐛𝐢𝐬 𝐢𝐜𝐡 𝐰𝐢𝐞𝐝𝐞𝐫 𝐢𝐦 𝐏𝐥𝐮𝐬 𝐛𝐢𝐧?

Suppose you decide to switch from investment A to investment B due to higher returns. Then you assume that B will perform better than A in the future. If you wait until you are back in the black with A (assuming you ever get back into the black with A), B will probably have risen more than A in the meantime. At least that's what your investment case says. Compared to an immediate sale, if you wait and sell A at a profit, you can buy less of B from the proceeds of your sale. You also have to pay tax on your profit from the sale of A, which means you can afford even less B. If you had sold at a loss, no tax would have been due. If that was too theoretical for you, there's also a calculation example a little further down.

Let's assume you want to switch from investment A to a lower-risk investment B. For example, because you will need the money in the foreseeable future. Even then, it makes sense to sell A directly and invest in B (in this case, it could also be the call money account), as A - due to the higher risk - could fall significantly further and you want more stability in your portfolio.

𝐁𝐥ö𝐝𝐬𝐢𝐧𝐧𝐧! 𝐈𝐜𝐡 𝐛𝐢𝐧𝐧 𝐦𝐢𝐫 𝐚𝐮𝐟𝐠𝐫𝐮𝐧𝐝 [insert any reason here] 𝐬𝐢𝐜𝐡𝐞𝐫, 𝐝𝐚𝐬𝐬 𝐀 𝐤𝐮𝐫𝐳𝐟𝐫𝐢𝐬𝐭𝐢𝐠 𝐬𝐭ä𝐫𝐤𝐞𝐫 𝐚𝐥𝐬 𝐁 𝐬𝐭𝐞𝐢𝐠𝐞𝐧 𝐰𝐢𝐫𝐝. 𝐄𝐧𝐭𝐬𝐩𝐫𝐞𝐜𝐡𝐞𝐧𝐝 𝐰𝐚𝐫𝐭𝐞 𝐢𝐜𝐡 𝐚𝐮𝐜𝐡 𝐧𝐨𝐜𝐡 𝐦𝐢𝐭 𝐝𝐞𝐦 𝐔𝐦𝐬𝐜𝐡𝐢𝐜𝐡𝐭𝐞𝐧.

If you're so sure about this and wait and see, you're market timing. If you're good at it (which I don't think you are, otherwise you wouldn't be in the red with A), you can of course speculate on it. But then you should shift everything into A, because you know that you will achieve an excess return with A. You don't want that? That's what I thought. So sell A immediately and invest in B.

𝐈𝐜𝐡 𝐛𝐢𝐧 𝐧𝐨𝐜𝐡 𝐧𝐢𝐜𝐡𝐭 ü𝐛𝐞𝐫𝐳𝐞𝐮𝐠𝐭. 𝐇𝐚𝐬𝐭 𝐝𝐮 𝐞𝐢𝐧 𝐩𝐚𝐚𝐫 𝐑𝐞𝐜𝐡𝐞𝐧𝐛𝐞𝐢𝐬𝐩𝐢𝐞𝐥𝐞?

Of course. Assume A and B are each worth 100 euros on 01.06. You bought A for 110 euros and expect a higher return from B. We assume that you are correct with your investment case and that B achieves a higher return than A. If you do not have (sufficient) confidence in your investment case, this is a clear sign that you should take a closer look at the two investments and the current market situation.

𝐒𝐳𝐞𝐧𝐚𝐚𝐫𝐢𝐨 𝟏: You wait until you are in the profit zone with A (115 euros to recoup the fees) and then switch to B. A actually rises to the desired 115 euros by 01.12. So you sell A for 115 euros, have to pay tax on the 5 euros profit and receive approx. 113.75 euros. As B increases more according to your investment theory, B has a value of 120 euros at this point. You buy approximately 0.948 B from your 113.75 euros.

𝐒𝐳𝐞𝐧𝐚𝐫𝐢𝐨 𝟐: Here, too, you want to sell A for 115 euros and then switch to B. However, A does not perform as you had hoped. On the contrary. On 01.12., the price of A is only 95 euros. As B has now risen to 120 euros, you get nervous and switch to B at a loss. You don't have to pay any tax and receive just 0.792 B for your 95 euros.

𝐒𝐳𝐞𝐧𝐚𝐫𝐢𝐨 𝟑: You sell A immediately and switch to B. As you are in the red, you do not have to pay taxes and receive exactly 1 B for your 100 euros. On 01.12. you don't care about the price of A, the price of B is 120 euros at the same time and you still have exactly 1 B.

𝐒𝐳𝐞𝐧𝐚𝐫𝐢𝐨 𝟒: You sell A for 115 euros. Even if B achieves a better return in the medium term, you catch a good time and can buy B for 114.50 euros. As tax is due on your 5 euro profit, you receive 113.75 euro and buy B for 0.993 euro.

So you can see that even if A performs slightly better than B, you will end up with more B and therefore more money if you sell immediately. In addition, you can certainly save yourself a few nerve-wracking glances at your portfolio because you invest directly in B, the investment you believe in, and don't have to hope that A, the investment you no longer believe in, will for some reason rise significantly more than B and you happen to catch the right time to sell and buy. You also fill your loss pot and can save tax if you sell another investment at a profit.

𝐔𝐧𝐝 𝐰𝐚𝐬 𝐢𝐬𝐭, 𝐰𝐞𝐧𝐧 𝐀 𝐝𝐨𝐜𝐡 𝐬𝐭ä𝐫𝐤𝐞𝐫 𝐚𝐥𝐬 𝐁 𝐬𝐭𝐞𝐢𝐠𝐭?

This is of course possible. Assuming A rises to 115 euros by 01.12. while B only rises to 110 euros. Then, after tax, you can still invest 113.75 euros in B and could buy 1.034 B. However, this would contradict your well-analyzed investment case and would therefore be much less likely than a higher price gain for B. So you are betting against yourself. Sounds strange, but it is.

𝐎𝐤𝐚𝐲 𝐨𝐤𝐚𝐲, 𝐢𝐜𝐡 𝐡𝐚𝐛𝐞 𝐯𝐞𝐫𝐬𝐭𝐚𝐧𝐝𝐞𝐧. 𝐇𝐚𝐬𝐭 𝐝𝐮 𝐭𝐫𝐨𝐭𝐳𝐝𝐞𝐦 𝐧𝐨𝐜𝐡 𝐞𝐢𝐧𝐞𝐧 𝐓𝐢𝐩𝐩 𝐟ü𝐫 𝐦𝐢𝐜𝐡?

Yes, to come back to the calculation example: Imagine you had 100 euros at your free disposal. Would you then put this 100 euros into A or B? Probably in B. So get the 100 euros by selling A and put them into B!

Have you ever held on to a bad purchase for too long or do you always sell immediately when the investment case no longer fits?

#strategie
#verlust
#fehlkauf
#learn
#esel