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When to Sell an Investment –



“You’ve got to know when to hold and when to fold,” according to the famous country and western song, The Gambler.

Kenny Rogers was talking about poker, of course, but knowing when to sell is one of the crucial facets of investing that marks out the amateurs from the pros in investing. It’s also one of the hardest decisions an investor has to make, not least because it often means you’re admitting you’ve made a mistake.

We look at five reasons why you might sell an investment – and hopefully make the process easier if you to decide to hit the button.

1) Something Fundamental Has Changed
In the internet age, there’s a lot of “noise” about companies hitting investors every day: a chief executive quits, a scandal emerges, or there’s a profit warning, a rights issue, a dividend cut – the list goes on. It’s often hard to ascertain whether an announcement is a one-off or symptomatic of deeper problems.

Some recent corporate failures (for example, Toys R Us or Carillion) have involved multiple profit warnings over a number of years, which could signal potential exit points for an investor.

Often companies are so associated with certain individuals (Elon Musk at Tesla (TSLA), Steve Jobs at Apple (AAPL)) that any change at the top can spark fear in investors. When Steve Jobs stepped down from Apple in 2011 due to ill-health, for example, some analysts thought the company would struggle to match its previous success – the share price is now 10 times higher.

This is also pertinent for fund investors. If you’ve followed a star manager for years and he or she quits, whether to a rival or to set up shop on their own, you may choose to follow the manager to their new home. Of course, some companies and fund houses have better succession plans than others, so this “follow the leader” approach may be less effective over the long-term, and some star managers have found life rather harder outside of big institutions.

Should I Sell? 
A fundamental change is a time to take stock and reassess an investment but it’s not an automatic sell signal. 

2) Your Own Strategy Has Changed
Investor goals change over time according to where they are in their life cycle, their attitude to risk and financial circumstances. Racy growth funds and stocks bought in your twenties may no longer be appropriate in your sixties, a time when people traditionally start moving down the risk scale.

Portfolios can change drastically over time as you add more to them and some stocks and funds perform better than others. You might have started off with a 10% exposure to tech, for example, but that has ballooned to 50%.

Sometimes investors take too little risk for their age and financial circumstances; and as you get more experienced at investing, you may want to ditch that vanilla tracker fund in the pursuit of higher returns. Or a financial adviser may, after looking at your retirement plans, argue that you need more equity exposure to meet your goals. A windfall, inheritance or promotion could put you in a better position to handle volatility than when your first started investing.

Should I Sell
It’s always good to step back and take stock of your financial situation and revisit the investment goals you had when you started out. You could think of the process more as “rebalancing” rather than “selling”.

2) It Keeps Underperforming
At Morningstar we encourage investors to take a long-term approach. One year’s poor performance figures isn’t always a sell signal. But after a long period of sub-par performance, your patience may run out.

For an active fund investor, the failure of a fund to beat the index over three years could be a reliable indicator to bail out. Or the fund could consistently come at the bottom in its category, meaning that rival funds have outpaced it. It could be that the investing style is out of favour, or it could be that something is intrinsically wrong with the process.

Poor fund performance often sends investors heading for the exits, something Morningstar monitors every month. Indeed, several high-profile managers have lost their jobs in recent years and fund outflows proved a reliable early indicator of investors losing faith. Fees are also a factor here – perhaps you were happy to pay above average fees when the fund was on a hot streak, but now they are starting to look uncompetitive when it’s putting in a sub-par performance.

Should I Sell?
An investment can’t be a top-performer over every time period but a sustained period of underperformance should be a signal that it’s time to look at why the stock or fund is consistently lagging its peer group and whether an alternative could serve you better.

4) Or, it’s Been Outperforming
You may have been fortunate or wise enough to spot a future star such as Tesla and Shopify (SHOP) in the early stages and have seen the value of your holding grow hugely as a result. If you’d bought Tesla shares a year ago, you’d be up more than 800%. 

At such times it can make sense to cash in some chips. The conventional wisdom is to run your winners for as long as possible, but from a portfolio perspective, a share price that has doubled or more can cause its own problems. For example, it could skew the risk profile of your portfolio as the successful holding grows in size. 

Morningstar’s Christine Benz has some housekeeping tips here. Known as rebalancing, reducing your holdings in a fund or stock holding that’s done well releases cash that can be put to work elsewhere. You still have a stake in your existing holdings so if they keep outperforming, you continue to benefit. 

Should I Sell?
Past performance is no guide to future performance, the investment adage goes, so taking some profits can be a wise strategy after a stellar run. But that doesn’t mean you have to sell your entire holding.

5. You’ve Inherited Some Shares
Your relatives may have left you some shares or funds as a bequest. Perhaps they were talented stockpickers or maybe they left you some duds that you wouldn’t dream of owning yourself. Either way you can revisit point two on our list and ask – does this stock or fund fit with my own investment plans and even ethical beliefs? And do I have confidence in the fund manager or company to outperform in the future?

Point four also comes into play here – if your relative has done exceptionally well out of the investment, perhaps it’s time to cash in? There may even be future capital gains tax implications in hanging on to the shares that you’d rather avoid so seeking professional advice may be useful in this situation.

Should I Sell?
Sometimes the simplicity of cash beats the uncertainty of shares – with an inheritance it’s often helpful to know exactly what you will get so you can plan what to do with it.

How to Sell
So far we’ve looked at why you might sell but not how. So what happens if you do decide to hit the button? Here are some tips:

1) Selling in tranches can reduce the risk of mis-timing the market. Just as you would drip-feed money into the market when buying, you could take the same approach to selling. You need to stick to this plan, especially if market conditions are unfavourable at the time you have scheduled to sell. 

2) Emotions can be the enemy of investors, especially when fear dominates as it did earlier this year. A market rout, when shares are posting big daily moves, is probably not the best time to get a decent price for your shares or funds. Often the market moves so quickly that it is easy to be left behind in the stampede to sell. It’s worth remembering that any falls in the value of your holding are only “paper losses” until you actually sell and it could be that your holding recovers and you get a better price by waiting to trade.

3) Practice makes perfect: the first time you ever sell it can feel like an irreversible decision. But experience – and making some mistakes along the way – can make you a better investor. Because most stock markets are reasonably liquid, you can always buy the stock or fund again if you’ve changed your mind, and this is something the professionals frequently do.

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Car Insurance for Canadian



Car insurance is vital, like snow days and maple syrup. Part of the Canadian experience. Not all countries need insurance policies by regulation as Canada does; the concept of a pay-as-you-go fuel tax has also been used as a substitute for traditional auto insurance in some areas. But, no matter how important it is, investing in the service is never the wrong decision. Insurance will save motorists from the economic burden of the ultimate inevitability of the road: accidents. They’re going to happen to everybody, no matter their experience or ability. Driving, like every other aspect of human life, is naturally a human mistake.

Also, the most experienced driver can be distracted in our current driving climate. With a reputable insurer, financial stability is only one thing to think about. Between the radio, the billboards, and the careless children thrashing around in the back seat, a few minutes on the road will provide more means of diverting someone’s attention than a few hours in front of the TV. All it takes is a misconstrued stop on a slippery day or a neglected shoulder search to cause thousands of dollars of harm to your property or the property of others. If the accident’s cost exceeds the price of the vehicle that caused it, auto insurance will save the driver from financial ruin. The protection in an appropriate strategy protects drivers in ways that the airbag has never been able to do.

The security provided by insurance is so vital that it has been obligatory for any Canadian who hopes to get behind the wheel. However, some jurisdictions offer consumers a preference as to who is protected by their auto insurance. Coverage is always mandatory, but the strategy is malleable. The right of motorists to monitor their plans and coverage does not end with the business either. Car insurance premiums are affected by a variety of factors. While some of these items are beyond the control of motorists, such as age and gender, they can still make many choices to lower their prices. Choosing a reliable vehicle, traveling shorter distances, and having fewer tickets are items drivers can do to keep their car insurance premiums as low as possible.

Some drivers, particularly new ones, are wary of individualized rates – paying different amounts for other people. Insurance firms, though, are not swindlers or profit-seekers. They’re just trying to keep auto insurance prices as reasonable as possible. A car that leaves the garage twice a week is less likely to have an accident than a car that goes twice a day. Station wagons are more comfortable to fix than imported sports cars. Every person has different driving habits, so it only makes sense to have a foreign car insurance policy. Acquiring a car insurance policy is more than just making a deal; it is the start of a friendship that will help the driver out in the toughest of times.

Some provinces in Canada, where motorists have too many car insurance options, any additional information could save the insured motorist thousands of dollars. It pays to be updated. The right strategy will keep you safe when anything else doesn’t matter where you’re in Canada.

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When it comes to investing, don't believe everything you see on TV –



Interest in investing is hitting new highs. Discount brokers are flooded with applications and trading volumes are surging. Despite this renewed focus, some misunderstandings persist about the realities of investing.

To illustrate, let’s deconstruct an investment conversation that you might have with a friend, colleague, or advisor. It goes like this.

“A guy on TV says the economy is strong and stocks are going up. It seems like a good time to invest. I don’t see much downside so I’m buying high-dividend stocks for my RRSP.”

A guy on TV

Many investors think there are people who know where the market is going. Experts who know something the rest of us don’t. The reality is, they don’t. Their insights may be interesting and unique, but any conclusions related to market timing aren’t worth the cup of coffee you’re drinking. It’s impossible to call the market level a week, month or even year from now with enough consistency to be useful. Stock prices are determined by a myriad of factors, many of which we’re unaware of until after they’ve emerged.

The economy looks good. I’m buying.

At the core of most market calls is an economic forecast. This is unfortunate because the connection between what the economy is doing and where the stock market is going is flimsy at best. It’s true that economic activity affects corporate profits, which ultimately drive stock prices, but the relationship is sloppy and unpredictable. Consider the last decade — we had the slowest economic recovery in history and yet profit margins were at or near record levels throughout, as were stock prices.

It bears repeating. Mr. Market is not paying attention to today’s economic headlines. He’s focusing on what the news might be in 12 to 18 months. The corporations you’re investing in aren’t reading the headlines either. They’re too busy trying to move their businesses ahead.

A good time to invest

For an investor with a multi-decade time frame, anytime is a good time. Some points in time, however, will be more prospective than others. These are periods when returns are projected to be higher based on fundamentals like rising profitability, low valuations and/or extremely negative investor sentiment. To be clear, these factors won’t tell you what’s about to happen, but will provide a tailwind over the next three to five years.

Not much downside

When you own a stock, the range of possible outcomes is always wider than you expect. It’s hard to conceive of a holding going down 20, 30 or 40 per cent, especially when things are going well. Unfortunately, recent price moves have no predictive value, they just provide false comfort.

The future for a stock that has recently done well is just as uncertain as one that hasn’t. Indeed, it may be riskier because its price-to-earnings multiple is higher (if profits haven’t kept up with the stock price), its dividend yield is lower and shareholders’ risk aversion, a necessary ingredient for good returns, has melted into complacency.

The higher the better

We all love dividends, but too many investors choose stocks based solely on yield. This is a problem because yield is not a measure of value for a stock like it is for a bond. A company’s worth is derived from it’s potential to earn profits into the future. Dividends are simply the portion of those earnings that get distributed to shareholders.

Yield-obsessed investors often downplay the importance of the stocks’ second source of return — price appreciation. Ask yourself the question: What would you rather have, a $10 stock yielding five per cent that’s worth $8, or a $10 stock with a three per cent yield that’s worth $12?

If you want to focus on dividend income, start with a list of stocks that have an acceptable yield. From there build a diversified portfolio of holdings that are trading at or below what they’re worth.

In your RRSP?

When asked, “What should I do in my RRSP (or TFSA),” I have only one answer. The most important thing driving your RRSP strategy is the strategy you’re pursuing for your overall portfolio (including other registered accounts, taxable accounts, pensions and income properties). Anything you do in your RRSP has to roll up into your household asset mix. In that vein, RRSP contributions are a wonderful tool for adjusting your overall portfolio because transactions have no tax consequences.

Investing is hard enough without basing decisions on false premises. If you find yourself listening to someone pontificate about where the market is going, try to change the subject or look for an escape.

Tom Bradley is

chair and chief investment officer

at Steadyhand Investment Funds, a company that offers individual investors low-fee investment funds and clear-cut advice. He can be reached at


Copyright Postmedia Network Inc., 2020

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Apollo Hit Again as Aksia Tells Clients to Delay Investment – BNN



(Bloomberg) — Apollo Global Management Inc. is coming under increasing pressure as more institutional investors hold off committing fresh capital to the Wall Street giant.

Aksia, which advises on more than $160 billion of investor commitments, urged clients not to give money to Apollo amid lingering questions over co-founder Leon Black’s relationship with disgraced financier Jeffrey Epstein, according to people familiar with the matter. On Friday, Connecticut Treasurer Shawn Wooden said the state won’t commit new capital to the firm.

An adviser to pensions, endowments and other large institutions, Aksia has begun communicating the move to its clients, said one of the people, who asked not to be identified because the talks are private. Apollo said this week it was hiring law firm Dechert LLP to investigate the relationship.

“Aksia believes it is prudent to delay any new commitments or investments with Apollo funds until the results of Dechert’s study are disclosed,” Aksia said in a client communication, noting that its recommendation was effective as of Thursday. “Should Dechert’s review uncover that Mr. Black had knowledge of or participated in any illegal activity, investors that recently committed new capital to an Apollo fund could be subject to intense scrutiny.”

A spokeswoman for Aksia didn’t immediately respond to a request for comment.

“We are firmly committed to transparency,” Apollo said Friday in a statement, noting that Black has been communicating regularly with investors. “Although Apollo never did business with Jeffrey Epstein, Leon has requested an independent, outside review regarding his previous professional relationship with Mr. Epstein.”

Aksia’s decision comes after the Pennsylvania Public School Employees’ Retirement System said it would hold off giving any new money to Apollo for the time being. Another investment adviser, Cambridge Associates, is considering not recommending Apollo funds, Bloomberg reported earlier this week.

Investors are stepping back from one of Wall Street’s most successful firms after fresh reports about Black and Epstein brought the issue back into focus. The New York Times said earlier this month that the Apollo chief wired more than $50 million to Epstein in the years following his 2008 conviction for soliciting prostitution from a teenage girl. The article didn’t accuse Black of breaking the law.

Existing Commitments

Gabrielle Farrell, a spokeswoman for Connecticut’s treasurer, said in an email that the state’s existing commitments to Apollo were “made under the previous administration and we have no plans to commit further capital to their funds at this time.”

Apollo said earlier this week that Dechert will conduct a review to independently evaluate Black’s past descriptions of a professional relationship with Epstein. Black, 69, has said he turned to Epstein for financial matters, such as taxes, estate planning and philanthropy.

The two men had been acquaintances since at least the early 1990s. From time to time, Epstein met with Black at Apollo’s New York offices, and he pitched personal tax strategies to the firm’s executives, Bloomberg has reported.

Apollo conducted an internal review into its involvement with Epstein to ensure that any ties went no further than the firm’s co-founder, people with knowledge of the matter said last year. That included examining emails and records to determine there was no connection between the company and Epstein, one of the people said.

(Updates with Apollo comment in sixth paragraph.)

©2020 Bloomberg L.P.

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