Hello. I keep coming across this term "top-slicing" - where can one read about this or what YouTube videos are on this topic?
I notice people doing it and writing about it in Investors Chronicle.What are they actually doing? Thank you.
Thank you.
Top slicing is simply selling a proportion of your shares after you have made a profit. There are lots of different strategies, some just sell a small proportion such as 10%, others may sell all the profit, leaving the original stake invested in the stock. Some will sell 25% if shares have doubled. I don't know about youtube videos.
You don’t need to read books about top slicing!
Investors top slice for various reasons.
e.g if a share they hold has done very well and they want to top slice some profits, or if it has become too high a percentage of their portfolio, or simply because they want to raise cash etc.
It is locking in profits by selling a portion of your holdings (presumably after a recent rise). Except for portfolio rebalancing I've never really understood this, if you expect the shares to continue to rise, why not hold? If you think it will fall badly why not sell the lot?
Top slicing is clearly justified if reducing the size of a holding that has got too large or if you need the money for something else. My personal experience is that positions which get large are telling me something, they are telling me to let sleeping dogs lie.
Because growth is slowing down? Price has got ahead of itself? There are better value stocks to invest in. If the price falls then you can buyback at a lower price. Price may continue to rise but the probably is lower and the rise maybe slower. Run your winners in the UK market does not always work, may work for a few years such as Boohoo (LON:BOO) and Card Factory (LON:CARD), even Games Workshop (LON:GAW) has had a roller coaster ride.
I have top sliced some of mine recently Luceco (LON:LUCE) and Volex (LON:VLX) and sold completely others that have had a good run, such as Reach (LON:RCH) and Ergomed (LON:ERGO) . I wish I had top sliced Sylvania Platinum (LON:SLP) . Many shares peak and then fall back.
In the market at the moment there seems to be a lot of buy the rumour and sell the story going on.
Those (better value elsewhere, cheaper later) are arguments for selling out completely. Clearly if the story changes then your decision to hold changes. You very commonly see top slicing in the context of "it has had a good run, think I'll top slice", which is asinine.
I've hold GAW and have let it run, had I sold at previous peaks I'd have missed out on later ones.
Or you can hedge your bets, as if you sell out completely, you may have got it wrong, like I did on Cerillion (LON:CER) and £FUTR. If you believe in the company still then why not top slice some profit and invest elsewhere? You are reducing your exposure.
Taking some profits is not asinine.
Looking at Ergomed (LON:ERGO), it was up 174% last year, this year it is up about 32%.
We'll have to beg to differ on portfolio strategy. I'm happy with my performance I hope you are happy with yours. I'd still like to see a youtube video on topslicing. it'd probably be really funny.
Yes whatever works for you.
So you never sell part of your stocks if they have gone up in value?
It is all or nothing?
Yes, I aim to buy on a good story and then hold until the story changes. The mistakes have slipped away from me faster than I could have reacted anyway, so selling a few weeks later probably helped me out.
The winners have done nicely indeed, you don't need many. My longest and biggest holding is Halma (LON:HLMA), well over 20 years and presently a 20-bagger. Wish they paid a better dividend and may eventually sell in order to secure that income. I once sold part of that holding to free up money for another opportunity but that may have been the one and only time (and probably a mistake).
17% pa for no work will do me. I might have sold and done better, I might have sold and done worse, I did what I did and am happy enough. Would I buy Halma now? Possibly not, but look at the 20 year price chart, if it keeps that up...
This must be tedious for everyone else. We should probably get a room :-)
Tee hee - interesting not tedious!
I think you and Ray have covered some interesting points. I've read loads of investing books and like you, I just couldn't get it when they recommended top slicing - I always thought if I believed in a share enough to hold it then it made no sense for me to top slice.
But I had a crisis of confidence in my method when I sold out of Sage and then Rightmove, purely because they did so well that they came to dominate the portfolio and I used to lie awake at night worrying about director selling etc. Selling those two had a life changing (in a bad way!) impact.
I realised that by top slicing out my initial stake then psychologically it's easier for me to detach from the worry and let them run. So I changed my method and top slicing has kept me in Dotdigital and Tesla years after I would have been scared into selling under my old method. Once I've got my money back out I don't care if they crash, I just remember the greater good of staying in the massive winners.
Like you say, each investor has to find their own method and what works for one person won't work for another.
So I think the real question should be are there any studies, personal experience on when to top slice.
I understand the top slice to bring a single share back to an agreed percentage of an overall portfolio but what about one that hasn't gone to high against the overall portfolio, but may have risen 80% after a very short time, do you lock in any profits or no bad news = no action.
100% gain = 20% top slice ?
50% gain = 10% top slice etc?
This is the bit I struggle with.
