Clean-up time | Value Research The ongoing bull market is a good time to get rid of the junk in your portfolio and shift to quality stocks

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Clean-up time

The ongoing bull market is a good time to get rid of the junk in your portfolio and shift to quality stocks


It's hard to sell winners. And when the markets are zooming high like they are now, then everything looks like a winner. The result is that most investors do not sell anything. In fact, that's the reason why the markets are so high - there are very few people who sell anything at all.

I wrote about this a couple of years ago too-- high markets are an opportunity to clean up our equity and mutual fund portfolios. However, the hard fact is that we all have junk in our portfolios, and there's no better time to get rid of it than now. If you have been investing for long enough, then it is inevitable that you have collected a lot of odds and ends that you have been doing your best to ignore. Don't worry, this happens even to the most organised and systematic of investors. In the past, whenever the markets have been high and you have been feeling happy, then, like all investors, you would have believed happy stories about a lot of stocks. Many of these stories turned out to be nothing more than pure fiction.

However, you still own those stocks. There were many investment themes and stocks that were at the top of the heap in 2006-07 and there were others that did remarkably well in 2010-11 and again there were others that were the stars of 2014. Many of these have simply faded away into oblivion. Most investors have some stocks that grossly underperform and one decides to ignore them for lack of adequate knowledge as to when to dispose them off. The attention shifts to new and exciting stuff and gradually one simply stops noticing the underperformers.

However, now that the markets have reached a level that some value can be extracted out of almost anything, it is time to take advantage of the situation and get rid of the junk. The investments that are sunk too low now to be noticed can be divided into three categories. There are those which are completely useless and have proved it by not recovering at all. There are those which have somehow recovered but aren't worth holding onto. And there are those which are good long-term investments and should be kept intact.

This is the perfect time to do this. However, do keep in mind that principally, I'm opposed to being in this situation at all. What we should really do is either never buy junk or sell it off whenever we realise that it's junk, regardless of its value. There's no sense in holding onto it just because you don't want to book losses. It will be a much better idea to sell such junk when the markets are down and buy fundamentally better stocks with the proceeds.

Beyond selling junk, the bigger idea is to clean up your portfolio. And this is the best time to tip the balance in your favour with attractive stocks. If you do not maintain your portfolio on, now is the time to create or update it. Make sure that you have entered all your investments. Now click on the 'Analysis' tab. This will give you the most incisive view of your portfolio. You will get your exact exposure to every sector and every company. This analysis cuts across stocks that you may have bought directly and those that have been bought by the mutual funds in which you have invested.

Our tools may well tell you if you have unwittingly increased exposure to something. You could have bought into a sector, and the fund managers of mutual funds in which you have invested could have done the same thing at the same time. This is just the right time to do this kind of portfolio clean-up, with a little help from

Of course, the best thing to do is to also subscribe to our new premium service, Value Research Stock Advisor (

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