The difficulty of knowing when to sell
I think many on this board are very good at doing detailed fundamental analysis, and getting a good feel for when to buy a stock. However, few are nearly as good( including me) at knowing when to sell. How many times have you let a stock go up 2 or 3 times and not sold, and then watched the stock come all the way back down to near your original purchase price, and stay there or worse yet, keep going down. The main reason it's so hard to know when to sell, is that stocks can come down on no news, and by the time you hear bad news, the stock can come down a lot further before you even get a chance to sell. How can you protect yourself against this? Well, there are many different attutudes I see, and I'm not sure which is best. One thing is you can always sell half at a double(if you get there) no matter what, and ride the other half if you really like the stock. Of course you can always sell all at a double too, then you make 100% no matter what. The way I play is to either hold as long as the stock is trending up until I hear bad news- or hold until I feel the stock has reached full valuation with slowing growth ahead. Under those circumstances, I usually sell all my stock. I will also generally sell half my stock in a BB company at a double or triple at most no matter what- even if I love the stock. Of course, you can miss out on some huge gainers if you always sell half at a double, but then again you will will always be safe. I believe there should be a prudent balance of risk vs reward at all times... Overall though, the toughest thing is knowing when to sell. I think , the most important thing is to not get down on yourself if you sell a stock too early. I mean, If you have a nice profit in a stock- especially if you made it quickly, there's never anything wrong with taking profits, no matter what. I hate to admit how many times I hurt myself by dwelling on what I could have made if I had only done this or that. Hey, the saying "hindsight is always 20/20" is so true. The main thing is to have some method of knowing when to sell, so that your overall(net) portfolio keeps increasing. I believe if you can keep your net portfolio on the increase every 6 months or so by at least 10%, you are doing great. Well, just thought I'd shoot the bull a little on this lazy Saturday afternoon. Wade
AI
