Would you be able to elaborate what attracted you to purchase stocks in HP? (note i have no idea about this company, other then i have one of their printers
and that i've never purchased a stock outside the ASX)
i was attracted to their long term 10 year EPS and free cash flow per share growth. In traders terms it was a nice 'upwards movement from left to right on the chart'. However the PE has been contracting, so this represents a potential opportunity.
I subsequently changed my mind because:
(a) i heard that the ex MD had been scrimping on R&D, this can make the near term profit good, but in the long run for a tech company can result in loss of market share.
(b) i heard rumours of accounting irregularities.
(c) my position was less than 0.5% of the portfolio. Generally in cases like this i either increase the position over time if i continue to like the story or i exit
(d) i dont know much about tech in fact i know less than most others, so i am relying very heavily on an investment matrix (ROE, PE, growth rates, debt levels, profit margins etc). This means that i cant use market specific product knowledge to compensate for my worries above.
I could well be wrong in exiting, but i am not happy to add to my position and with it being less than 0.5% of the portfolio value its returns have no real impact on the overall portfolio. Therefore exit.
It does seem tho you are quite active on your buying/selling.
My decision to buy and sell is governed by three over riding factors:
(a) the relationship between intrinsic value and market price
(b) the state of my margin loan (generally i will increase the margin loan when i see very good buying opportunities, but then i will start to bring it back once those buying opportunities become less attractive). I will not just sit on a high LVR ratio with margin debt and hope for the best. Often this involves reducing positions with the 'least' upside potential at current market prices.
(c) my strategic investment view from which i cant yet form a conclusion as to whether we are in a secular or cyclical market.
A buy and hold strategy is only appropriate in a secular bull market.
Only shares in my portfolio now that i would consider reducing slightly as said before is WES. Currently on 2010 PE of 23, compared to WOW who is 17 PE. But my portfolio is simply not the size of yours, so to do it once you consider transaction costs/tax is not worth it
Personally i would not be looking at 2010 anymore its historical now. The market is forward looking so you need to be forming a strong view on 2011 and at least a weak view on 2012.