Keep a sell list

Investors keep a watch list

I recently read about a quick but unintuitive investing tip that I'd like to share. Most investors keep a watch list of shares that they are tracking to take advantage of big price movements. This article was recommending that investors also keep a list of shares they've sold previously.

Why would you keep a list of shares you've already sold?

The simple reason for keeping a 'sold' list is to help investors learn from their mistakes. By knowing at what price and on what date you sold certain shares that you used to hold allows you to keep track of whether your decision was a good one. As a result of analysing whether your decision was good or not you should improve as an investor.

The sort of analysis that makes keeping a 'sold' list worthwhile, should go as follows: about a year ago I sold my shares in Aviva at a loss. I had originally bought the shares at 370pence. My original purchase of the shares had been with a view to selling them at about 500pence, whilst enjoying the higher than market average dividend in the meantime. Today the share price is about 350pence. Even with an additional years investment within Aviva the share price will still not have reached, what I and many others, considered at the time, it's underlying value. I will continue to watch this share.

Why does it matter what happens to previously held shares?

The record allows you to gauge the quality of your sell decisions. Are you selling too early? Did you get out of a toxic stock in time?

Furthermore, if your decision was a good one, you made profit on the company that you bought into for various value reasons, and then the company has a large drop in share price, this may indicate to you that there is value to be found again in the company. In which case, it is probably a good time to buy.

So my advice is that all investors should keep a quick excel spreadsheet of all previously sold shares. Makes a note of the price at which the shares were sold and the date. But most of all remember to learn from your previous trades!

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