My job is to recommend good picks, their entry price and exit price and an approximate time frame when the target may be achieved. I also provide market commentary at times and publish reports and opinions on global and local scenario and sentiments.
But I cannot recommend you to book losses on your previous holdings and switch over to my recommendations. That should depend on the amount of loss you will make and how much you can potentially gain by picking up another stock with the remaining money. At times, it works. For example, I disposed off some of my holdings at small amount of loss, picked up SKS Micro Finance and in 2 weeks, I recovered my losses and made some further profit. So the decision on booking loss and switching over should come from you, based on your own calculations and risk appetite.
How to take that decision? Well, now you may consider this thumb rule I follow. If I want to book a combined loss of Rs 10000 in stock A+B+C and switch over to profit making stocks D and E, then:
a. A, B, C all has not been drifting down slowly or going downhill for at least 3 months and the future prospects of A, B and C in next 1 year are very dim.
b. D and E must be strong stocks I believe in (I believe in their business, their industry and their own growth plans and prospects)
c. After booking a loss of Rs 10000 in A, B, C, I must be left with at least Rs 90000. So if I have a total loss of Rs 5000, I must be left with at least Rs 45000. And I will this money entirely to invest in D and E.
Thus, for loss-holding switchover, I have calculated the optimum ratio of loss:remaning money to be 1:9. This ratio helps to recover the losses in around 6 months time, provided you answer yes to yourself on and points a and especially b.
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