Time and again, I read about users who have made 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.
๐๐๐ฅ๐๐ก๐ ๐๐ซรผ๐ง๐๐ ๐ ๐ข๐๐ญ ๐๐ฌ รผ๐๐๐ซ๐ก๐๐ฎ๐ฉ๐ญ, ๐ฎ๐ฆ ๐๐ข๐ง๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ข๐ญ๐ข๐จ๐ง ๐ณ๐ฎ ๐ฏ๐๐ซ๐ค๐๐ฎ๐๐๐ง?
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 In short: the reason why you invested in A is no longer valid.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.
๐๐ ๐ฌ๐๐ก๐จ๐ง, ๐๐๐๐ซ ๐ฆ๐๐ข๐ง ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐ข๐ฌ๐ญ ๐ฃ๐๐ญ๐ณ๐ญ ๐ฌ๐จ ๐ฌ๐ญ๐๐ซ๐ค ๐ ๐๐๐๐ฅ๐ฅ๐๐ง, ๐๐๐ฌ ๐ฐ๐ข๐ซ๐ ๐ฌ๐ข๐๐ก ๐ฌ๐๐ก๐จ๐ง ๐ฐ๐ข๐๐๐๐ซ ๐๐ซ๐ก๐จ๐ฅ๐๐ง. ๐๐๐ซ๐ฎ๐ฆ ๐ง๐ข๐๐ก๐ญ ๐ง๐จ๐๐ก ๐ฆ๐ข๐ญ ๐๐๐ฆ ๐๐๐ซ๐ค๐๐ฎ๐ ๐ฐ๐๐ซ๐ญ๐๐ง, ๐๐ข๐ฌ ๐ข๐๐ก ๐ฐ๐ข๐๐๐๐ซ ๐ข๐ฆ ๐๐ฅ๐ฎ๐ฌ ๐๐ข๐ง?
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 plummet even further and you want more stability in your portfolio.
๐๐ฅรถ๐๐ฌ๐ข๐ง๐ง๐ง! ๐๐๐ก ๐๐ข๐ง๐ง ๐ฆ๐ข๐ซ ๐๐ฎ๐๐ ๐ซ๐ฎ๐ง๐ [insert any reason here] ๐ฌ๐ข๐๐ก๐๐ซ, ๐๐๐ฌ๐ฌ ๐ ๐ค๐ฎ๐ซ๐ณ๐๐ซ๐ข๐ฌ๐ญ๐ข๐ ๐ฌ๐ญรค๐ซ๐ค๐๐ซ ๐๐ฅ๐ฌ ๐ ๐ฌ๐ญ๐๐ข๐ ๐๐ง ๐ฐ๐ข๐ซ๐. ๐๐ง๐ญ๐ฌ๐ฉ๐ซ๐๐๐ก๐๐ง๐ ๐ฐ๐๐ซ๐ญ๐ ๐ข๐๐ก ๐๐ฎ๐๐ก ๐ง๐จ๐๐ก ๐ฆ๐ข๐ญ ๐๐๐ฆ ๐๐ฆ๐ฌ๐๐ก๐ข๐๐ก๐ญ๐๐ง.
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, as 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.
๐๐๐ก ๐๐ข๐ง ๐ง๐จ๐๐ก ๐ง๐ข๐๐ก๐ญ รผ๐๐๐ซ๐ณ๐๐ฎ๐ ๐ญ. ๐๐๐ฌ๐ญ ๐๐ฎ ๐๐ข๐ง ๐ฉ๐๐๐ซ ๐๐๐๐ก๐๐ง๐๐๐ข๐ฌ๐ฉ๐ข๐๐ฅ๐?
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.
๐๐ณ๐๐ง๐๐๐ซ๐ข๐จ ๐: 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.
๐๐ณ๐๐ง๐๐ซ๐ข๐จ ๐: 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.
๐๐ณ๐๐ง๐๐ซ๐ข๐จ ๐: 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.
๐๐ณ๐๐ง๐๐ซ๐ข๐จ ๐: 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.
๐๐ง๐ ๐ฐ๐๐ฌ ๐ข๐ฌ๐ญ, ๐ฐ๐๐ง๐ง ๐ ๐๐จ๐๐ก ๐ฌ๐ญรค๐ซ๐ค๐๐ซ ๐๐ฅ๐ฌ ๐ ๐ฌ๐ญ๐๐ข๐ ๐ญ?
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.
๐๐ค๐๐ฒ ๐จ๐ค๐๐ฒ, ๐ข๐๐ก ๐ก๐๐๐ ๐ฏ๐๐ซ๐ฌ๐ญ๐๐ง๐๐๐ง. ๐๐๐ฌ๐ญ ๐๐ฎ ๐ญ๐ซ๐จ๐ญ๐ณ๐๐๐ฆ ๐ง๐จ๐๐ก ๐๐ข๐ง๐๐ง ๐๐ข๐ฉ๐ฉ ๐รผ๐ซ ๐ฆ๐ข๐๐ก?
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
