When describing the MFI approach, Greenblatt readily admitted he had trouble finding an optimal time to sell. At the end, he essentially punted - saying to be driven by taxes - so if a stock is up, wait until you have held for one year and if a stock is a loser, sell just before the year is up.
I do not have a great answer. I do think it is relatively important not to sell based on emotion. So I think I will base upon several items:
- My intent is only to look at each stock once a year to decide. I will pick the anniversary date, which I list below (so MNDO will be next).
- If the stock is a non financial stock, I will likely keep so long as it is a top decile stock.
- If the stock is a financial stock, the call will have to be a judgment call.
- I want to keep balance between sectors. I have not really defined what "balance" is, but will work on it.
- Finally, I want to keep a balance between stocks and bonds. Right now I am about 15% bonds (in this portfolio). That seems like a reasonable start, though over time I'd like to get that to about 25%. Once I am at 25%, the goal will be to keep it around there.
|Stock||Shares||Ann Dividend / Share||Yield||Projected Dividend||Sector||Worth||Anniversary|
|FCX||503||$ 1.00||2.3%||503||Basic Resources||21,967||11/28|
|STO||1,000||$ 0.94||3.7%||940||Basic Resources||25,250||11/23|