Take Profit and strategic changes


I am still a little behind with updates for September, some of the stocks that paid dividends have not actually made it to my account and I want to give a precise situation, hence the wait.

While waiting I have started reviewing some of the strategies that are animating my investments.

Portfolio Size

In a June post (Haircut) I stated that it was time to cut down the portfolio size to 40 stocks. Well, now it swelled again to 47 assets but there are some that are about to be sold so the size will probably fall down to 45 items more or less. I still think that they are quite a lot to keep track of, but I have programmed my google sheets in a slightly more advanced way, so now I have more information at a glance to read numbers in a better way.

DCA Rule

In my Rules of Engagement, I started off setting a “DCA zone” of -10% on the price of a stock. I have tried to stick to this rule, but alas I soon found out that the more I DCA the less effective is a subsequent DCA action. This is why I have extended the rule a little, allowing the DCA threshold to be higher if I am already invested heavily into the stock. This DCA investing must also be weighted with the coming ex-dividend dates.

5 Years Dividend Policy – Take Profits

What did I learn from the market crash in August? Well, first of all money loss is only on paper, if you don’t sell you are loosing money only virtually, and if you believe that the stock is good the fall is just another opportunity to have a better average price. But another thing I learnt is that I need to put in practice a more “trader like” approach. I had some stocks that were 30/40% higher than the starting cost, and to see them go -5% in 1 week was a bit of a sad event. Not quite for the “paper loss”, but for the opportunity lost in not realizing a capital gain.

Since my PF is devastated by double taxation and my yield is lower because of that, I have decided that when a stock enters the “5 Years Dividend Zone” it.’s time to take action. The 5YDZ is just the point when the stock grows so much that the NET capital gain covers 5 years of NET dividends. That is the point where I set a sell order IF the price goes back to that point. If the stock keeps rising there is no sell that kicks in. If the price is met, the bank will sell everything but 1 piece of stock, that will be the point where I set in a buy order for a lower price (to be decided), reinvesting the 5 years dividends too.

This approach works only with the lower tiers dividend players, should cover me in the event of a sudden fall of the security, and should allow me to have a better performance.

Of course the sell order is set only when the price exceeds the 5YDZ of 2/3 %. Right now (thanks to the low dividend) I am experimenting this system with DISNEY.

The 5YDZ will be set only if the ex dividend date is at least 30 days away in the future (don’t want to loose the dividend), if the stock goes ex-dive sooner than that time limit there is a bit of thinking to be done.

In a way this is a bit of a “trader like” approach, so I am not sure that it might work for me, but it might cover my assets in case of a sudden market crash like we experienced. This time I had cash to invest and in the end things were not so bad, but tomorrow I will invest only my savings and this means lots less bullets to shoot.

And how about you readers? Do you have “protective” measures against market/stock crashes?

6 thoughts on “Take Profit and strategic changes

  1. Una sorta di formula mista…
    Un po’ quella che ho adottato io sino ad oggi… solo sulle aziende che non considero imperdibili.
    Ho capitalizzato oltre 4000 euro di capital gain netto… soldi utilizzati per acquistare altre azioni.
    Il guaio è che..oltre a pagare parecchie tasse… vendere molte di quelle aziende è stato un errore,


    1. Ciao Alfio!
      Grazie del commento!
      Beh si la formula diventa mista e prevede che si rientri sul titolo venduto, con tutta la liquidità fatta. Se il titolo “rompe” il supporto esco con il 99% delle azioni, e immediatamente metto un’ordine di acquisto ad un prezzo ovviamente piu basso del supporto, o anche al prezzo di carico dell’unica azione che rimane in PF. Poi li va visto se il titolo scende cosi tanto o no, ma non stiamo parlando di fluttuazioni del 40%, ma piu vicine al 10% percui ci sta che il titolo ritracci se gia è in fase calante. Considera che l’ordine di vendita viene messo quando il prezzo è almeno il 3% superiore alla soglia, e sono tutti titoli molto “tranquilli” di solito non hanno fluttuazioni “forti”… Non sò è da testare la cosa eh, ad oggi ho due ordini programmati solo su MCD e DIS…


  2. an investment portfolio does indeed require some basic management rules that are in line with our objectives, risk profile and tax situation.

    For now, I am a buy and hod investor. But I do understand that you want to take action on double tax on dividends. Getting A 5 years worth of dividends gives you basically ( years the time to buy the stock back at a lower price, with loosing out on the dividend. An interesting approach. I am curious to see how it will work out over the coming years



    1. Ciao ATL,
      Basically what Alfio wrote (in italian) here above is referred to his experience where he had great gains but he missed out on some stocks that later in life would have gotten him much higher returns if he was invested in them. My idea is that the money I make MUST go back into that stock quite quickly (if possible), generally when there is a sharp correction or a decline in value it’s easy to cover 3 to 5 years worth of dividend in few weeks, the important part of the plan is that one I sell I immediately put a buy order for the stock, then monitor that over time…

      Ciao and thanks for coming!


      Liked by 1 person

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