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I’m not cut out for individual share ownership. Through pure happenstance I’ve ended up holding shares in two separate companies, and the problem is I now feel obliged to make judgement calls. Should I keep them, sell them, how are they faring against their competitors? It’s all a bit of a hassle.
Compare that to my retirement portfolio, stuffed full of index funds representing thousands of individual businesses. I never give those a second thought. So why can’t I extend the same indifference to two measly company shares?
The sensible move is obvious: sell up and reinvest the proceeds into an index fund. But that’s where FOMO is gumming up the works. A quick look at Google Finance tells me both are doing rather well — one has returned 55% over the trailing twelve months, the other 35%. And that little voice in the back of my mind keeps whispering: “what if they do it again?”
I’d never think like that about my index funds. With those, I just accept whatever the market delivers, good or bad, and get on with my day.
I can’t imagine the stress of actively managing a basket of 30 or 40 individual holdings. I’d spend a quarter of my day staring at a screen. Individual share ownership is clearly not my hobby.
And yet, thanks to that stubborn irrational streak, I’m not doing the sensible thing. I’m holding on, letting two positions consume 95% of my investment headspace, despite comprising less than 0.1% of my total wealth. Whatever they do will have absolutely zero effect on my net worth.
What’s really amusing, if I’m being honest with myself, is that my excuses have a remarkable ability to shapeshift with the seasons. Two years ago, when both shares were underperforming, I held on because it felt wrong to sell at a loss, I’d wait for a recovery. Now they’ve recovered rather nicely, I’m holding on because it feels wrong to sell winners. I’d hate to miss what comes next. I have a creeping suspicion that next year, whatever happens, I’ll have an equally airtight excuse at the ready. If nothing else, I’m consistent in my inconsistency.
I consider myself a rational investor and a reasonably sensible person. I’ve written all of this out, diagnosed my own irrationality in some detail, and arrived at the perfectly logical conclusion that I should sell. I won’t, of course. I’m a little bit weird that way. But it has to be said: it was a very sensible conclusion to reach.
Thank you, Mark. I feel better knowing I am not alone. You described my own situation very well, and this individual share holding (Microsoft), the only non-index shares I own, has taken up my headspace for the two weeks. Why can I not just leave it alone or sell it? Do I want to pay capital gains on it, or should I save it to allow a higher Roth Conversion?
Another question for me also follows: Should I re-invest the proceeds in an index fund, or keep it in a money market as part of my cash reserve? Which then makes me wonder: How much cash do I really need? Some advise five years to help avoid any sequence of returns risk, others three years, and even others one year.
That said, I still sleep well. No rush on this. I am having fun doing the research!
Microsoft, I can understand why it occupies your thoughts. Nothing sharpens your focus quite like owning a piece of a business that’s ultra-sensitive to the whole imponderable tech question! One of my individual positions is currently trading around $8 — though I read an analysis yesterday putting fair value at $14, which is exactly the kind of thing that gets me down these rabbit holes in the first place. Clearly I need to stop reading about my own holdings. I went very suboptimal with my cash allocation and overdid it on the duration, five years. But I’m expecting that to give me some Zen-like calm when my first market downturn hits in retirement.
I just looked – I own 56 different securities. Do I worry much? No.
What would drive me crazy would be owning a fund. I’d be looking at each stock in the fund and thinking do I really want to own that one? Isn’t it a not-so-great company, rather overpriced?
Oh my — it really does highlight how differently we’re all wired. Personally, I’ll take the good with the bad in an index fund just to keep my sanity. That said, I completely get why you’d rather pick individual stocks if the alternative is lying awake at night second-guessing the quality of thousands of securities you’ve never chosen. Both approaches are valid.
Do you track your individual holdings in a spreadsheet? I know someone who has theirs linked to a live data reporting service, so he’s always working with near real-time figures directly inside his sheets.
I have a spreadsheet, but I type the prices in. This allows me to see how things are going.
But large-cap dividend-paying blue chip stocks seldom get into real trouble. They go up and down depending on how business is, but it takes a long time to turn into a real dog.