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04-01-2014, 09:54 AM
(This post was last modified: 04-01-2014, 09:57 AM by cannew.)
This seems to be mentioned often, I wondered what you mean by Core Holdings?
To me core holding stocks are ones I've decided to buy and probably hold forever. I would only consider selling if the company was to merge with another or if management cut the dividend without cause (as I saw it). Otherwise I'd hold, re-invest the dividends and buy more every time the price dropped below my value price.
My other holdings are ones I bought because I believe they are good dividend growth stocks, have a good DG record (min 10 yrs) but I'm not as comfortable calling them a Core holding. I would look to sell these if they did not increase their dividend, where with a Core stock I'm not as concerned if the dividend is not raised every year.
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I like the term core holding, but do not like the term 'hold forever' at all. Fore me, a core holding represents a position that has a target weighting and which has an after purchase sentiment of long term hold. It may be in the accumulation phase, at say 1/4 full, 1/2 full, 3/4 full. Or it may be topped out at maximum weighting. Any shares above the core holding may be more transient, for trading purposes. So a person may refer to trading around the core position.
The problem that I have with 'hold forever' is that for many folks, that means hold with very little if any review, almost never looking for a more suitable replacement. To me it just makes sense, at least a couple of times per year to review, and see how such a core holding stacks up against the alternative investments. If the reason for originally buying remains valid, great. But if there are better alternatives at the time, then perhaps it is time to make a change. Investors tend to get too comfortable or to fall in love with their 'hold forever' stocks, and to me, that is not a healthy mind set.
Alex
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I have core holdings, but that does not mean hold and forget. In fact the original poster did not even say hold and forget without adding the qualifier "probably."
My mantra is buy and monitor, sell and replace.
When DRI had a horrid quarter recently, I sold it in a heartbeat. When INTC went to a fifth quarter without raising the dividend, I sold in a New York second. When KMB had recent sub 5% increase! I put it on probation. If next year's is below 5% it will be gone also.
There is no emotion in it. There are portfolio rules that are followed.
If you do not have a business plan with rules about when to sell, I suggest you develop one.
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I think people think of core holding as anything that resonates with their basic investment philosophy. For index investors, core holding would be an index fund tracking the S&P 500 perhaps, for a growth focused investor - something like GOOG or AAPL that an investor trusts will serve them well for the long haul.
