Lock-in shares in SEC

[hunter]

One of my friends does and interesting thing. He is so sure one of the shares will appreciate exponentially for next 5 years. To prevent him get tempted and sell early, he locks in these shares in SEC. When locked in, he cannot sell them until unlocked.

This is the first time I heard anyone wanted doing it.

[nuwank]

When you invest in a share, you invest a part of a company. So, you have to think of it as a business. If you had your own business, would you value your business on a day to day basis? I think not. You have to view investing in a share of a company the same way. If the company is going to do well in the future, why would you want to sell the share or even want to know what the share price is on a day to day basis. This is real investing. Look at anyone who has made money as an investor on the Forbes rich list. They have held their investments for long, long, long time. That's why Buffett say that his holding time is "forever". He also says that when you invest in a company, you buy it thinking that the stock market will be closed for 5 or 10 years.

[milanka]

@nuwank , explained nicely , good work + rep too

[Antonym]

@hunter: Hats off to your friend! As you have rightly pointed out, there are very few such investors on the CSE. The easy gains of 2009 & 2010 have made the stock market an alternative to the gambling room, for some people.

I myself hold more than 70% of my portfolio (shares that I do not intend to sell in the near future) in a 'locked balance'.

[2011_NewComer]

@Antonym -
I'm interested about this...can remember you mentioning about this earlier also.

how do you lock them? The ones you have bought from market? (if we buy from an IPO we can select that option in the form I think).
You do it through your broker? and how to unlock and how long will it take to lock or unlock a share?
And is there a minimum amount that we need to lock or can we even lock 200, 300 shares?

many questions...

[Antonym]

@2011_NewComer: For transferring the shares that you have bought from the secondary market, there is a very simple form to be filled - Form CDS 6(A): 'Request for intra-account transfer of securities'.

Just fill in your name, account number and the quantity & company code of the shares to be transferred from your trading balance to your locked balance (or vice versa).

This form needs to be submitted through your broker. There is a space where the broker has to authenticate your signature and authorize the transfer to locked balance. For me, the entire process took only 2 days.

There is no minimum number of shares to be transferred. It's like having your shares in a 'fixed deposit'. If you so wish, you can transfer the locked shares back to your trading account, with no charges involved.

[2011_NewComer]

Thanks for the explanation Antonym +rep

[npp]

I too would have done this but one this I understand prevented me doing it.
That is, you will not get the 50% margin from the broker for the locked balance in CDS. Correct me if I'm wrong.

I do not use the credit much but i use it to make purchases when an opportunity arises.

[Antonym]

You are probably right about not getting the 50% margin on locked shares.

For me, that aspect doesn't matter because I have decided not to buy shares with credit or borrowed funds.

[npp]

You are probably right about not getting the 50% margin on locked shares.

For me, that aspect doesn't matter because I have decided not to buy shares with credit or borrowed funds.

I too try my best not to use too much of credit. why i need is because ill lose interest keeping money at the broker. so i have taken an overdraft against my FD and it's ready to pay the broker within T+3/5 if i buy using the credit.

[Tiger]

Locking shares or having long term approach is very good, however you need to be aware of the price fluctuations. As you all know markets behave on sentiments, thus there are periods where even fundermentally strong shares trade at premium.
You can cash in such times.

So in my opinion, always keep a sense of intrinsic value of a share.

[2011_NewComer]

I have another question regarding locked in shares..
Antonym or anyone who has experience please answer

If I have lockedin shares are they shown in my online trading system under my portfolio or will they be shown somewhere separately(using dfn tws).

Are they given in the CDS account statement I get monthly?

thanks

[Antonym]

I too try my best not to use too much of credit. why i need is because ill lose interest keeping money at the broker. so i have taken an overdraft against my FD and it's ready to pay the broker within T+3/5 if i buy using the credit.

@npp: I think your approaches of not being over-dependant on credit and minimizing the net interest cost is admirable.

Locking shares or having long term approach is very good, however you need to be aware of the price fluctuations. As you all know markets behave on sentiments, thus there are periods where even fundermentally strong shares trade at premium.
You can cash in such times.

So in my opinion, always keep a sense of intrinsic value of a share.

@Tiger: You are absolutely right; investors need to be aware of what their share is worth - and cash in when the price has run too far ahead of fundamentals.

If I have lockedin shares are they shown in my online trading system under my portfolio or will they be shown somewhere separately(using dfn tws).

Are they given in the CDS account statement I get monthly?

@2011_NewComer: Good question... Your locked shares are not displayed in your online trading portfolio (just as a Bank FD is not displayed in your savings account).
The monthly CDS account statement is a complete view of your transactions and balances; the locked shares are shown separately, so you know that they are there.

[2011_NewComer]

thanks Antonym. That's what I wanted to know 'how to know that they are there safely' . Now clear.

[StocksWatch]

I also learnt a lot about this subject by this thread. Thanks antonym and others.