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Secrets of Successful Wealth Management: 9 steps to the life you've always wanted, before and after retirement.

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Topic: Wealth Management

Wealth Management Planning: Part 3 of 4…How to sell stocks most profitably

Trican Well Service Getting back to the basics is the perfect way to start any new year. That’s why we’re bringing you a series of four special posts that examine the major portfolio decisions every investor needs to make. We outline the approach we follow with our wealth management clients.

This week: How to sell stocks in a way that improves your portfolio—and avoids the trap of trying to “buying low and selling high.”

Next Tuesday, another key step in wealth building from our Successful Investor Wealth Management service.

Today: Sell stocks in a way that improves your portfolio.

Many of our wealth management clients live off their investments. From time to time, they need to sell some of their holdings to supplement their dividend income. Rather than trying to predict price changes or spot highs and lows, we focus on tailoring the client’s portfolio to his or her circumstances and temperament.

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We still have opinions on the outlook for the market and individual stocks, and we take them into account. But we focus on designing a portfolio that suits the client and won’t suffer too much if our predictions are inaccurate, as will inevitably happen from time to time.

Here’s one highly simplified example. As you know, we spread client funds across most if not all of the five main economic sectors. The Manufacturing and Resources sectors are the most volatile of the five. That’s where our clients’ biggest gains are most likely to appear. If we focused on predicting stock prices and spotting highs and lows, we might be inclined to sell some manufacturing or resource winners early, in hopes of “buying them back on a dip,” as brokers say. But we know that selling your best stocks early can deprive you of your biggest long-term gains. So, we tailor our profit-taking to the needs of the client.

If gains in Manufacturing and Resource stocks have left an income-seeking client with too much exposure in those sectors, we may reduce his or her holdings in those areas when cash is needed. On the other hand, if a client is still adding to his or her investments, we’ll hang on to winners in these highly volatile areas. That’s only if we feel they have additional capital-gains potential. But when the client adds funds to the portfolio, we’ll invest the new funds in other sectors.

This dilutes any excess exposure to the Manufacturing and Resource sectors, while cutting the risk of selling your best stocks way too early.

Wealth management planning: Nobody can consistently determine what is the “high” or the “low” of a stock

The factors we focus on—investment quality, portfolio diversification and balance—have little interest for many beginning or unsuccessful investors. They assume the key to making money in stocks is simple: just buy low and sell high.

In fact, successful investing is simple, but not easy. The factors that make a stock attractive are easy to spot. However, many people find it hard to focus on these factors. Success would be much easier if you could simply find a reliable source of market predictions. The problem is that nobody can consistently predict market direction. No one can reliably determine what is “high” or “low” in the price of a stock. But the Successful Investor method gives you a way to live with this uncertainty.

The method gives you a way to build an investment portfolio that generates enviable results when stock prices are rising, and limits your losses when prices fall.

Next week: Part 4 Get all the profits you can out of your best stocks

Part I (January 12, 2016): The best way to buy stocks profitably throughout your lifetime.

Part 2 (January 19, 2016): How to invest in stocks successfully for the rest of your life.


  • I’ve been a subscriber now for about a year. Doing so has enabled me to revise my portfolio and make decisions about investments that allow me to sleep at night. During this most recent stock market rout, I haven’t lost any sleep, knowing my decisions and investment actions are grounded in sound knowledge. Feels as though, for the first time in my life, I can buy stocks with confidence. Thank you!

    • Thanks for the comment Jane.

      If you follow our three-pronged approach–diversifying across most if not all of the five main economic sectors, sticking mainly to well-established companies, and avoiding companies in the broker/media limelight — then you can be almost certain of long-term gains in excess of what you’d get with any other investment approach.

      In a deep or long-lasting market setback, your high-quality stocks will tend to go down, along with everybody else’s. However, I think they would go down less and recover sooner.

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