My wife has a brokerage account managed by an advisor. A lot of the positions are 8-10 years old and have gains of 200-400% or more.
Here are some examples:
ADP +200%
APH +589%
DE +440%
DHR +360%
MMC +386%
The portfolio also includes big names like Costco and Disney.
While I’m thrilled her account is doing so well, I find it a bit concerning that the advisor seems to have a ‘set it and forget it’ approach. Shouldn’t they be taking some profit along the way?
I’d appreciate any insights on whether this is standard practice or if we should be concerned.
The best strategy is often just sitting tight. You should sell when you need the money, when a position becomes too large, or if the fundamentals of the company change.
Hollis said:
The best strategy is often just sitting tight. You should sell when you need the money, when a position becomes too large, or if the fundamentals of the company change.
If your wife doesn’t need the money now, there’s no real reason to sell. These are all solid, blue-chip companies that are likely to keep growing.
You only sell when the company is no longer a good investment. Being up a lot doesn’t mean it’s time to sell. Selling for the sake of it just creates a tax hit without any real benefit. All the stocks you mentioned are solid holds.
Let your winners run. Great companies compound over decades. ADP, APH, DHR, and MMC are all fantastic businesses. I wouldn’t sell unless you absolutely need the money. If anything, you should consider buying more on dips.
Warren Buffett said, ‘The stock market is a device to transfer money from the impatient to the patient.’
Your advisor’s approach of holding strong companies has clearly worked. For example, my advisor bought NVDA for me in 2017, and it’s up significantly. They only sold part of it when it grew to 60% of my portfolio. Your advisor seems to be doing just fine.
A share represents ownership in a business, not just a ticker to trade. If these businesses are still strong, why would you sell? I’ve held NVDA since 2011, and it’s up over 40,000%. Good companies tend to keep growing. Let your winners run unless you need to rebalance or the fundamentals change.
@Rafe
The one exception might be when a single position grows too large in the portfolio. In that case, trimming it can make sense for risk management, even if you believe in the company.
Let’s do the math: a 300% gain over 9 years is about a 17% annual return. Selling now would mean losing 20% or more to taxes (unless it’s in an IRA). Letting it keep compounding makes more sense in the long run.