Eoin, given how markets have deteriorated of late, could I be so cheeky as to ask why you have not cashed in on Rolls Royce yet? It looked like a great but when it near tripled to 140p, but it’s nearly halved now and you’ve sat tight. Surely there must have been a key technical level between then and now to warn you to sever ties with this one. I ask because I too sit on similar scenarios and I keep asking myself why I don’t cash in a while ago while the going was still good, making it more difficult to let go now, despite prices still sliding, seemingly day by day.

Eoin Treacy's view

Thank you for this question which may be of interest to the Collective. The broad aerospace and airlines sector has been deeply affected by the pandemic lockdowns and is taking longer to recover than I expected. Nevertheless, I remain confident it will recover.

Rolls Royce is losing money and has high debt which is weighing on the share as the global economy slows down. Nevertheless, it is a national champion in the UK, has a global franchise, leverage to emerging technologies and defense and trades on a price of sales of 0.6. I’m not worried about the short-term performance because I believe it will be the kind of company that prospers in future.

I also have the luxury of not having to worry about relative performance. If I were managing a portfolio, with quarterly reporting obligations, I would have to be more focused on the near-term performance which continues to trend lower.

In looking at positions, I view the level at which entry points are made as the most relevant consideration. If the initial purchase is timed well, it leaves significant scope for patience. If the purchase price is too high, you’ll feel every tick. Ultimately, you need to answer whether the reason you originally purchased the share has stood the test of time. If not, you need to answer whether the story is even better now or no longer relevant.