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Re: ArizonaGuy post# 11536

Sunday, 01/28/2007 11:06:46 AM

Sunday, January 28, 2007 11:06:46 AM

Post# of 131532
Arizona,

If I may offer any advice about that it would be this:

If you believe in INXR's current upside potential to a greater degree than that of the other holdings you refer to, then you should sell some of it to buy more here.

That is based on the theory or feeling (pick one) some people adhere to which is:

Whatever capital you have today is the only thing that matters in evaluating your positions. If you have one stock that will take 3 months to go up and another about to go, you sell at a loss and put it into the hot stock that will go up for the next month or so. Then you will have plenty more money to buy back the other stock.

I hold that belief to one extent. I modify it because I have real long term investments that last more than a year and I don't touch them, but I also keep a real portion of my capital in play and among those stocks that capital is in I make calculated decisions about where the money will grow sooner.

This topic might also be filed under Opportunity Cost. If you sit on a weak position just because you are down then you are often depriving yourself of the ability to make money in a better, more active stock.

I can't tell you how many times I've cut my losses on one stock (as much as 50% down) and made it back within a week on another stock. Besides, the loss you take will go towards lowering your taxable gains for the year so it all works out well if you have the ability to time what stocks to dump for another.

Never be afraid to commit to a winner. Sometimes that means cutting out a currently losing position. The only number regarding your capital that ultimately matters is how much you have to work with Today. If you can take what you have today and make it bigger in the next month, you probably should take the road that will get you there and not hang on to the path that is presently going nowhere unless it is a well researched long term investment you have great faith in.