Here’s a tip I just received from Truly Rich Club and I think it’s worth a share.

Bro. Bo calls this Top Slicing.

This tip is useful for those investors who have been investing for quite some time and has huge unrealized gains by now.

If you want to know what it is all about, then continue reading below.

The Concept Of Top Slicing

Truly Rich Club’s latest Stock Alert teaches the concept of top slicing. According to Bro. Bo, top slicing is a concept wherein you sell a portion of your investment and let the remaining portion ride the volatility.

By locking in your gains, you will now have the extra money apart from the one that you put in every month to buy the other stocks in the SAM Table.

Why Top Slicing Is Effective In Value Investing

As a value investor, I believe that volatility should not be feared; it should be used as an opportunity to increase portfolio gains.

Top slicing is an effective way to make money in stocks during volatile times. Let me show you in this example.

John, a TRC subscriber, purchased 10,000 shares of SAM stock ‘ABC’ at an average price of P5.015/share amounting to P50,147.50 (incl. fees) a year ago. Today, his investment is now worth P64,808.25 or an average price of P6.481/share.

Now, after reading Bo’s advice, John is now thinking if it’s a good idea to take profits now. If he decides to sell it all, he’ll gain P14,660.75 or a 29.24% increase in his portfolio. John hesitates because his investments hasn’t reached the target price. But since he now knows the concept of top slicing, he decides to sell only 2,000 shares amounting to P12,961.65. From that sale, he gained P2,932.15. Now, his portfolio is now up by 5.85%.

What John really did in this case is that he realized 20% of that 29.24% total gain. From the P14,660.75, he took 20% of the overall profit which is P2,932.15.

After the sale, John now has a cash balance of P12,961.65 including the gain which he can use to buy other stocks in the SAM Table.

Now, if under certain circumstances, the stock declined at a price much lower than his average price, then he can repurchase shares with the cash balance gained from the sale. That will effectively lower his average price and once the stock rebounds, he can again sell for a much higher profit.

If after selling at P6.50, the stock rose the next month at P7.50, he can then again slice off his investments to realize profits.

I see this concept as a way to effectively manage the risk in volatile markets such as gaming stocks and as a way to preserve capital.

Bro. Bo’s Advice To Truly Rich Club Members

At TRC, Bro. Bo advises his members with huge gains to sell 20% and let the 80% ride the volatility. The proceeds of the sale should be divided into six parts to be deployed for the next six months to other SAM stocks.

This is effective if you have a portfolio with at least P150,000 with 20% or more unrealized gains. The reason is that if you’ll sell 20%, that would be P30,000. Divide that into six parts and you would get P5,000 which is the recommended amount that most experts say a person should invest every month.

Final Thoughts

As a value investor, volatility shouldn’t be feared. It should be looked upon as an opportunity to increase returns. But investors should also be cautious when playing with volatility. It should be embraced with proper risk management.

By doing the top slice concept, not only do we lock in gains, but also we are able to protect and preserve our capital.

I’m now considering to apply this concept once my investments reach target gains of 25%. Thanks to Truly Rich Club, this advice gave me a different view on what to actually do with my unrealized gains.

If you want to get more practical stock advice and tips, consider joining the Truly Rich Club so that you’ll be guided and mentored by missionary millionaire, Bro. Bo Sanchez.

Happy investing!