Thatās my technique too. A dividend pie to stick my money into and forget about for the most part!
Yes I get what you mean by lose the market. I must be colour blind, I didnāt notice your IBM blue line for a moment.
Indeed in theory. Of course the value of a stock may rise or fall even on the day dividend is paid. Many forces at play.
Well that graph is wildly out of context, only have O/JNJ from those picks.
There is plenty of dividend paying companies that outperform market long-term.
JNJ/O both outperform S&P long-term:
So I strongly disagree with buying index funds, if indeed you plan to do your due dilly, information today is more accessible then ever.
Like in any business/work, majority is sub average, but those that invest time to learn can be above average.
Frightening new investors saying that only Warren Buffet and select few can beat market, so just give up and pay buy overpriced index fund is not very productive, there is always beaten down sector, beaten down stock due to short term noise.
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All your trying to do in your scenario is time the market and take profit. Fine if you get it right but statistically it is unlikely you always will.
So for example thereās no guarantee that when you cash out that the stock price wonāt continue to grow in which case youāve missed out on that part of the price growth.
That may be what you want to achieve ie realise profit from short term changes but that is at the potential ācostā of longer term gains. Both are valid strategies depending on your investment timeframe.
I agree, it may not always work. Iām talking about sharp anomalous increases for example however. Nobody has ever gone bankrupt from taking profit, and thatās my strategy.
As regards my other reason why I would sell to realise gains, I would see no reason why anybody should feel obliged to hold on to a stock which is on a long term downward trend as compounding works in reverse too. Personally, selling and realising gains is the better approach here as a risk management strategy. I want as much control as possible and putting my fate in a company to recover rather than taking my gains and walking takes that control away from me I feel. To use a drastic example, imagine a Luckin Coffee/Hertz/Wirecard situation where sharp declines were seen for multiple days in high profile cases. Here, no amount of holding could convince me selling and locking in profits is a bad approach. Who knows, in 10 years time maybe Wirecard will have pivoted to become the next Mastercard and the bagholders will be in profit; but by selling, you increase cashflow to make more money with, even with CGT.
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Meanwhile, while the discussion heats up, @pipo creeps out the back doorā¦ 
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Haha this must be a wind up, whoever told you that is a fool run in the opposite direction when they give you any advice.
While also misquoting what I told him in his original post, just to stir the pot even further.
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Might end up being a losing strategy.
Starting with an example balance of Ā£10,000.
If you take profits on every time your stock rises by say ā¦ 5%, then you make Ā£50.
But what happens when you start losing money?
If you drop to say Ā£9500. The same 5% now only nets you Ā£47.5
So every time you make money you end up cutting into your future profits, but when you lose money you settle with taking less profits. So do you take anything out then or just keep adding it in until you get back to Ā£10,000ā¦
Over time you will gradually erode your profit margins.
This is the same principal of people trying to earn a living trading.
On a good run, you have some money for yourself.
On a bad run, you end up worse off.
The issue arises over time though, so you may not notice this until a year passes.
I agree with this (although just to add that the 5% would be compounding in both directions).
See my posts above. This is what I was explaining to @pipo. Not what he initially posted, twisted my words, as always!!
I was talking to him about stocks exhibiting exponential growth vs those which donāt in essence.
Hi 
I havenāt gone anywhere. Iāve already discussed this with him 12 billion times so Iām just watching with some popcorn.
By the way Iām not misquoting. He literally said word for word: āIf you invest ā¬1000 and it gains 10%, you now have ā¬1100. In year two if your investment increases another 10% you only get another ā¬100ā i.e. you canāt earn anything on your gain unless you sell the ā¬100 profit and buy back into the same stock. I was totally discombobulated but I know itās wrong anyway.
I used the āInvesting for noobsā story of where you invest $10,000 in Amazon at their IPO and today that same $10,000 is worth something like $12 million.
I asked him if my $10,000 investment went up to $10,500, should I sell the $500 profit and reinvest it back into Amazon? Thereby going full circle and ending up with $10,500 worth of stock. (minus whatever fees and spread etc.)
He said yes. Sell the $500 profit and reinvest back into Amazon to lock in profit.
I then asked, what if the price shot up after I sold the $500 gain? Iād have to buy back in at a higher price. His solution to that is to immediately buy back in the second you sell. Iām not sure if you have to do this all the way along to $12 million but I didnāt confirm that.
Anyway this made 0% sense to me. So I had to come here and ask if anybody else does this technique and get some opinions.
Also I wonder if @obrienciaran can explain to everybody here how T212 would go brankrupt from exponential stock growth. Maybe T212 could chime in too and let us know if thatās a possibility. If itās true Iād love them to explain how it could happen. Thatās another interesting one that I mentioned in this tread but hasnāt been explained yet.
Iām legit confused at this whole thread lmao.
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Iām enjoying this thread.
As the UK100 took its latest tumble a week ago I opened positions as it tracked down.
Over the last week Iāve locked in some profit by closing the highest positions (when the opportunity arose) and replacing them with lower ones.
The idea is I reduce my risk if things go south again before a recovery, and increase my eventual profits when the recovery comes, while compounding profit as I wait.
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@Matt_C, I think what Richard meant was maximising your capital gains tax limit, which from Richardās post in the UK it is Ā£12 300 , to pay less tax whenever you actually decide to sell.
Lets look at the following example for UK investors based on a capital gains threshold of Ā£12 300:
Lets say you invest Ā£10 000 in buying 10 000 shares of Shell at Ā£1.
Lets say that in a years time the price per share has increased to Ā£4, now the total value of your shares is Ā£40 000 , and you have a unrealised gain of Ā£30 000.
If you sell it all in the same tax year you will pay tax on the profits over Ā£12 300, so you will pay tax on Ā£17 700 (which is Ā£30 000 - Ā£12 300).
However, lets say that you do not currently intend to sell and it is coming to the end of the year and you have not yet used your capital gains allowance of Ā£12 300. You can do what Richard says to use up your allowance and reduce your tax payment in the future by increasing the price at which the tax agency considers you bought the shares.
If you sell part of the shares and rebuy them again within the same month, this does not count as a transaction and the price at which you bought stays the same. However, from what I can understand from Richards post:
Lets say you decide to use up your capital gains allowance, then you could:
Buy an additional 4000 shares of Shell before the end of the tax year, lets say on the 1st of March at the current price of Ā£4 (which is an investment of Ā£16 000).
If you then on the next day sell 4000 shares from your initial pot, at a price of Ā£4 for a total value of Ā£16 000, this gives you a capital gain (profit) of Ā£12 000, considering that you bought the shares originally at Ā£1. Which you can count towards your capital gain threshold of Ā£12 300.
In summary, from what I understand from Richards post after doing this, you would still have 10 000 shares, but your average price (used by the tax authorities / HMRC) would be Ā£2.2. So your unrealised gain is no longer Ā£30 000, but it is Ā£18 000 and it has not cost you a penny (as long as you didnāt have any other capital gains).
This is beneficial, because for example if you decide to sell for the same price of Ā£4 in in a future tax year, you will only have to pay capital gains on a profit of Ā£ 18 000 which comes from multiplying your 10 000 shares by your profit (current price of Ā£4 minus ānew averageā price of Ā£2.2). Yet you still have your Ā£12 300 allowace for that year, significantly reducing your tax liabilities.
Please let me know if there is anything that is still not clear. I may have gotten a bit carried away and made it a bit too complicated.
Note: This is not advice, it is just a clarification based on my understanding of the previous post 
.
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Yes me too. I am getting lost.
But most of that makes no sense. Thatās not how compounding works. Youāre still not getting my points. See my other posts above.
This was my initial point in a nutshell which @pipo is getting confused at! For me this is taking back control and minimising risk when a compounding effect isnāt happening naturally. Which is what I suggested to pipo.
Yes thatās what I thought, and makes more sense. Paying CGT now on a smaller gain to pay less later on a larger one. Can also combine with capital loss sales if you have positions that are likely never going to recover.
@EquityInvestor You have understood my post correctly. Iām glad someone did! 
There are those UK investors who can do everything within an ISA and never worry about tax. But for those whose savings grow, hopefully ISA will eventually become insufficient. Once that happens, tax planning becomes a significant element of investment strategy.
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I was hoping by the time I have enough to need to worry about that Iād have my own accountant š¤·
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