Here’s why I’ll never give up on my Lloyds shares

Lloyds shares have been a poor performer in my ISA for years now. Is it finally time for me to admit defeat and sell up? Oh no!

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Lloyds Banking Group (LSE: LLOY) shares have been a serial disappointment. For years, I’ve thought they were too cheap. But I’ve hung on, bought more, and they’ve fallen again.

Shouldn’t we dump losing shares? Maybe. So why won’t I sell my Lloyds shares?

Is it because I don’t want to admit defeat, and look like a failed investor? Not at all, no. I’ve had my failures over the years, and I’m always happy to hold my hand up — and hopefully help other people.

Stay with it

I was going to say I plan to keep the faith. But no, faith has got nothing to do with it. It’s all about rationality, and that’s what I want to stick to.

In the past, I’ve hung on to shares that the market didn’t like for ages. And I finally gave up and sold, because it just wasn’t happening.

It pains me to look back on some of them now, and see that they did eventually come good. Their fundamental performance was actually strong, as I’d thought, and the big investors finally saw it and moved in.

So that’s what it’s all about. It’s about the performance of the company, about its earnings, and the dividends it can pay.

Trouble at the bank?

Risks come into it too, and there are indeed some facing Lloyds right now. A property slump isn’t exactly great news for the UK’s biggest mortgage lender. And super high inflation isn’t the best thing either.

Everyone seems to expect Lloyds, and the other banks, to rack up some significant bad debt provisions in the next 12 months or so.

Hard times

And yes, that everyone includes me. In fact, we’ve already seen the beginnings in the first half of 2023. But it’s happened before, and it’s just a natural part of banking that investors have to cope with.

So yes, Lloyds shares might have more of a tunnel to get through before there’s any light.

But then I look at Lloyds and its magic sixes. That’s a forecast price-to-earnings (P/E) ratio of six, and a dividend yield of 6%.

And when I see that, I reckon I can easily handle a bit more darkness while I wait for some future sunshine to brighten the sky.

When to sell

Still, knowing when to sell remains the hardest thing in investing, I think. It’s definitely my big weakness, even after decades of buying and selling shares.

But there’s one thing I’m definitely not going to do. I won’t sell a stock if I still think it’s good value, no matter what anyone else thinks or how bad the share price chart looks.

So no, I’ll never give up on my Lloyds shares. Well, actually, let me add a caveat to that. I’ll never give up on my Lloyds shares… as long as I think they’re good value and the bank’s performance is sound.

Buy some more?

So, definitely not now. In fact, a top-up buy is very much a possibility before the year’s out.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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