It’s the end of the month. This would normally mean that it’s time for me to review and consider selling any stocks that I’ve held in the SIF folio for nine months or more.

In the turmoil of March’s market crash, I suspended my usual month-end review. I could see no benefit in selling stocks into such a negative market. This week, I need to decide whether to return to my normal trading rules or extend my selling ban until visibility improves.

I’ll also take a look at the latest news from three stocks which should be under review this month:

The lockdown dilemma

In my main personal portfolio, all of my positions are held for the long term. Managing the crash has been relatively easy. So far, I’ve only sold one share in this portfolio this year (to swap for a better quality peer). Otherwise, all I’ve done is to selectively average down on some positions.

The situation is more complex for the SIF folio (which I also own in smaller size). This is essentially a trading fund, where the typical holding period is just over nine months. I expect most if not all of the companies in the portfolio to stage a decent recovery eventually. But in some plausible scenarios, this could take several years. I can’t wait that long. 

My inclination is to wait until forward visibility improves before selling any stocks. But this could backfire badly. When forward visibility improves, the view could be grim. We could see a renewed market slump as the harsh reality of what’s happened hits investors. 

Conversely, the world’s economies could rebound relatively quickly, cushioned by the vast wave of government support measures which have been put in place.

If I continue to sell stocks on my usual schedule, I’m effectively taking a neutral stance. This has been the strategy I’ve followed religiously over the last four years

However, the current situation is unusually severe. It’s been 12 years since we had a market crash of this magnitude, and 100 years since we had a global pandemic. I think I can justify taking a more active stance in such circumstances.

My decision: On a long-term view, I share Warren Buffett’s view that stock markets will generally continue to rise. But over…

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