Ten of Australia's top fund managers share their advice on buying, selling and trading ASX shares in 2023. Covering both emerging and present trends in the 2023 Market.

We asked them: Do you have any advice for our subscribers? Are there any particular catalysts that cause you to quickly take action, either buying or selling?

My top tip is that share prices follow earnings. If you can find a business in which you can generate conviction that will have much higher earnings in the future, then keep an eye on those earnings and hold on. When it comes to selling we typically sell on soft signals such as staff turnover, a change in strategy or hard signals such as an earnings miss expectations due to factors within management’s control.

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When the story changes, even if it only appears incremental, it is usually time to act. The first downgrade is rarely the last. Don’t try and play last year’s story. Don’t convince yourself that value is appearing when in reality it is evaporating.

If we see changes in underlying operating trends, we look to take action by either buying or selling quickly. Similarly, if a share price has run too aggressively, we are not afraid to sell down our position. The best way to buy and sell stocks is to have done your homework in advance so you have the knowledge to act quickly.

If a company does not perform as expected from a fundamental perspective, always reconsider your holding. It’s about taking the emotion out of investing: you're going to be wrong, sometimes often, so deal with it and move on. And remember, tax losses have no value if not realised. In respect to buying, don’t jump in all at once, build a position over time as an investment proves itself.

We are long-term focused investors, with several of our positions held since opening our doors in 2015. We typically hold illiquid positions that are often difficult to quickly trade in and out of. So our buying and selling decisions are generally made within this framework: we would look to buy stocks that we are comfortable to hold for several years given strong medium-term upside potential, and sell stocks when our long-term thesis is broken or if valuations become excessive.

If you are interested in learning more about the Blue Chip Stocks and how to invest in this area read more here.

Everything we do has a thesis and valuation behind it. The catalysts to buy are clearly the massive discount to valuation and how the share price, with company actions, would get to that valuation. “Quickly” buying is that the opportunity is being recognised by others, so we need to invest more rapidly to capture it. Selling is the reverse, being that valuation is attained and not likely to advance sharply, or more likely our thesis breaks down. Best examples in 2022 were Namoi Cotton (NAM) where we were looking for returns of capital from vastly increased profits – the company are reinvesting with additional equity in new opportunities which we are less enthusiastic about. We exited very profitably. We also sold Agency Group (AU1) since it was clear that the company has limited use for public shareholders, has retained a sub-optimal capital structure and may have expanded costs at the wrong time. Wasn’t our thesis!

If you are lucky enough to have cash and dry powder ready to deploy, you have the luxury of patience. Invest when you see a stock under real pressure and buy slowly, chipping away.

Invest in stocks that interest you and act aggressively but thoughtfully at a time of other people's discomfort.

These tactics worked in the middle of June, and we are looking at similar conditions right now!

In relation to selling, if you need to sell stock because you identify cash needs in the future, just sell.

In individual stocks, a weekly or monthly evaluation of whether your story is still intact and whether there still remains a pathway for the company to get from where it is now, to where you hope it is going, is helpful to put your positions into perspective.

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