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I'm Selling Macy's And Viacom

I don't normally like to sell on days my stocks are down, but...

At the same time, I realize that extraordinary gains can only be gains if you keep them. Normally it's my preferrence to buy and hold investments forever, but short term market volatility occasionally brings opportunities that normally wouldn't be there. So with a heavy heart, I sold out of Macy's (M) and Viacom (VIA.B) today. 

There are a few reasons why. First are the paper gains. On my average cost, I was up 15% on Macy's, and more than 25% on Viacom, and that is exclusive of dividends paid. Average market returns are only about 10% a year, so I look for reasons to sell when I'm doing significantly better than the averages. I started buying big positions in these guys around April, and it's barely two months later. On an annualized basis, that makes those gains 90% and 150%, respectively. So I needed to ask myself if it was likely that there could be gains exceeding 10%/annualy from this point forward had I continued to hold. It's hard to say that right now.

The second reason I sold is for allocation purposes. My bond holdings had fallen below 20% of my porfolio, so that's my warning signal to myself to rebuild that hedge. This is a very personal choice, and might have zero to do with your own decisions. For me, I want that closer to 25% of assets.

The third was relative yield, in particular with Viacom. There are other stocks in my portfolio with higher yields and I am considering adding to those instead. I'll be talking more about those stocks soon.

I'm not necessarily done with these holdings forever. Should the opportunity show up again, I will most definitely buy back in. Hope, however, is not a real investment strategy.

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