Why 'selling out' was a smart money move
Why 'selling out' was a smart money move
How exiting a long-term position made sense for my financial goals.
Nine months after I said I would get rid of Realty Income, it’s finally done.
We’ll no longer receive payouts from “The Monthly Dividend Company.”
It’s OK. It’s not like we earned a huge return. Still, we made a profit, which is the primary goal of investing.
But selling out of a stock position after almost two years carries complex emotions no one warns you about. Questions swirl. Uncertainty sets in at the mere thought.
What if I’m selling too soon? Will I regret my decision if the stock price goes up after I sell? Am I overthinking and bucking the tried-and-true, buy-and-hold philosophy?
That’s why it’s important to have clear criteria for selling.
For 23 months, Realty Income, ticker symbol “O,” was one of my babies. Collecting its dividend every month excited me. A growing monthly dividend payment helped to make me a better steward of my money. The more I could pump into Realty Income, the more dividends our investment would produce.
Over the past two years, however, I’ve evolved as an investor, learning more efficient ways to grow our money and committing to exploring them.
I’ve also learned not to fall in love with any stock. As satisfying as Realty Income’s monthly dividend was, we weren’t going to grow rich with such a small stake in the company. And I had no plans to add to it. I’ve become a believer in passive, index-fund investing.
I tapped out at $1,215 invested. The good news is I sold high, or at least higher than the price that I bought the stock.
I sold my 20.5 shares of Realty Income for $63.68 on Oct. 14. The stock price increased another $1 before shifting into a falling pattern over the past month. It closed last Friday at $57.51 — $1.50 less than my average purchase price.
I’d be down $32.12 today if I held. Instead, I chose to collect and reallocate.
These two factors made the decision to sell clear.
I applied the same logic and experienced similarly fortunate timing with Google, ticker symbol GOOG. I had invested in Google for 757 days, just shy of 25 months. I sold my four shares for $182.70 a share on Oct. 30.
Google’s stock price closed at $178.35 last Friday. I still would have collected a substantial profit if I sold today, and I have no doubt that we’d have made more by holding those four shares for longer. But I was satisfied with seeing a 100% profit the day before Halloween so I sold.
We took back $2,042.27 after closing out of both positions — $1,309.78 from Realty Income and $732.49 from Google.
From that, we profited $557.73.
Of that, $189.38 came from Realty Income, split almost evenly between capital appreciation and dividends.
Now you see that, over 23 months, we can do much better with our money.
Maximizing our resources is the priority, much like how I reallocated funds after my August selloff to invest in stock options. This approach ensures that every dollar is working as efficiently as possible to grow our wealth.
Because I had a sentimental attachment to Realty Income, I wanted to do something special with the capital that came from that investment. I wanted to make sure I remembered where it went.
It didn’t take long for me to land on the perfect idea. You remember my approach to Christmas, right? If so, you know that I’m all-in on gifting stocks over material stuff such as toys and trinkets.
I’ve already transferred $500 of the proceeds into Parker’s checking account for her Christmas bonus. In December, she’ll transfer the money to her brokerage account and invest it.
Meanwhile, I couldn’t help but to buy six shares of Nike while the company’s stock price continues to struggle. I did the same with The Hershey Company, purchasing two additional shares. My theory is both will rebound in time and I’ll look back on the decisions as strategic dip-buys.
Grand total: $819.83.
Lastly, I transferred $700 out of my brokerage last week, which unfortunately went toward yet another attorney bill.
Not the ideal use of funds, but it’s a reminder that life happens.
And after cashing out my “babies,” I didn’t have to sweat it.
Disclaimer: The information contained on Money Talks is not intended as, and should not be understood or construed as, financial advice. I am not an attorney, accountant or financial advisor. These are my personal experiences, and neither this website, newsletter nor podcast is a substitute for advice from a qualified professional.