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When to sell stock?

cpwill

cpwill

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Alright. So this year I broke my own rule, and bought into two individual companies (I always tell people to go for mutual funds) because I thought the industry was a future wave. Thus far (about 7-8 months) I'm up 39% on one and 28% on the other.

Anyone have a consistent strategy for either taking profits and/or pulling out the principle and taking the profit as "free stocks" that works well for them?
 
How did you get rich? Bernard Baruch: by always selling too soon.
 
cpwill said:
Alright. So this year I broke my own rule, and bought into two individual companies (I always tell people to go for mutual funds) because I thought the industry was a future wave. Thus far (about 7-8 months) I'm up 39% on one and 28% on the other.

Anyone have a consistent strategy for either taking profits and/or pulling out the principle and taking the profit as "free stocks" that works well for them?
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You can take the profit and use some cash to buy options. You can also buy a put and keep the stock. Problem is that you do have to understand options and how they behave. This is not always as the broker might suggest. If you cannot calculate it yourself, though, don't do it.
 
cpwill said:
Alright. So this year I broke my own rule, and bought into two individual companies (I always tell people to go for mutual funds) because I thought the industry was a future wave. Thus far (about 7-8 months) I'm up 39% on one and 28% on the other.

Anyone have a consistent strategy for either taking profits and/or pulling out the principle and taking the profit as "free stocks" that works well for them?
Click to expand...

I would take a look at the relevant charts and look at their histories. If they are near historical highs I would sell either the entire lot or if the upside still looks like there's more to go, sell enough to remove your initial money from the table. (I personally as soon as I can take my money off the table, and just play aggressively with the houses money.) That's the simple easy way. The other way involves derivatives. If you know about those you don't need my advise, you are more than competent enough to figure out how to work the plays.
 
cpwill said:
Alright. So this year I broke my own rule, and bought into two individual companies (I always tell people to go for mutual funds) because I thought the industry was a future wave. Thus far (about 7-8 months) I'm up 39% on one and 28% on the other.

Anyone have a consistent strategy for either taking profits and/or pulling out the principle and taking the profit as "free stocks" that works well for them?
Click to expand...

You answered your own question to a degree. Right now you have a sure profit. Tomorrow you have a possible profit, but also a possible loss or no change. The reason you and others recommend mutual funds is usually stability. Stock markets tend to rise, and mutual funds with them. So assuming since you yourself recommend mutual funds, you find stability desirable, the best move then becomes to sell and put the money into those mutual funds. While there are several potential pitfalls in the market as a whole upcoming, most likely it is going to trend upwards, and potentially accelerate.

The problem with playing individual stocks, and in fact playing the market beyond mutuals is that there are no consistent strategies. If you are not a professional, you probably won't get burned, but you will get a return over time of roughly whatever the market does. Also, last advice: when people refer to "house money", punch them. It is not house money, it is your money that you have earned, and if you lose it, it is a loss to your assets, not the houses. If more gamblers and stock market advisers understood that basic point it would be a better world.
 
Redress said:
You answered your own question to a degree. Right now you have a sure profit. Tomorrow you have a possible profit, but also a possible loss or no change. The reason you and others recommend mutual funds is usually stability. Stock markets tend to rise, and mutual funds with them. So assuming since you yourself recommend mutual funds, you find stability desirable, the best move then becomes to sell and put the money into those mutual funds. While there are several potential pitfalls in the market as a whole upcoming, most likely it is going to trend upwards, and potentially accelerate.

The problem with playing individual stocks, and in fact playing the market beyond mutuals is that there are no consistent strategies. If you are not a professional, you probably won't get burned, but you will get a return over time of roughly whatever the market does. Also, last advice: when people refer to "house money", punch them. It is not house money, it is your money that you have earned, and if you lose it, it is a loss to your assets, not the houses. If more gamblers and stock market advisers understood that basic point it would be a better world.
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"House money" denotes the money appreciation the underlying instrument (in this case stocks) accumulates over and above initial acquisition costs including slippage and brokerage fees. Its a slang term. Those initial costs once recovered go to OTHER investments, allowing the trader to stay in the current trade and pursue higher risk strategies and attempt to garner a larger profit. Because of the riskier strategies usually but not always involved with the remaining assets in the trade, many traders presume the money to not exist, unless or until it is actualized. The strategy is a form of risk management. You can punch me now. Do notice however I applied it to me and what I do when I gave my advise. Note: money traded or invested in the stock market is not real, until it is actualized, (cashed in) otherwise its just numbers on a screen.

Side note: If you are not a professional and you play the stock market, the likelihood is you will get burned and you will either have a very expensive education or you wont be trading in the market directly. The market is full of sharks, and unless you have institutional type money to be able to make a market, chances are you will be eaten many times.
 
I only have 1 publicly traded stock now--an insurance company with very specific business-oriented lines where there is less risk than selling to the general population. The vast majority of our stock is private-placed bank and development projects stock which is not so easy to trade quickly sometimes, and if you do, it is hard to get back. When I used to have more traded stocks, I would sell whenever I felt there was a better opportunity in another stock. I tend to hold stocks over a longer window than most. It is something I have been thinking of getting back into, but I haven't really found an online trade site that thrills me. I want cheap trades and little to no balance requirements basically in case I need to rearrange my money for awhile.
 
cpwill said:
Alright. So this year I broke my own rule, and bought into two individual companies (I always tell people to go for mutual funds) because I thought the industry was a future wave. Thus far (about 7-8 months) I'm up 39% on one and 28% on the other.

Anyone have a consistent strategy for either taking profits and/or pulling out the principle and taking the profit as "free stocks" that works well for them?
Click to expand...

Tom spends a great deal of time trading stocks -- picking winners and losers. (He usually holds them too long.) But the rule of thumb he'd LIKE to live by is to start taking his principle off the table as stocks rise. (For the last two years, he's made (cash in hand) over $20,000 in profits.)

If it were a stock like AT&T? I wouldn't do that. But if it was a speculation? I would. Hopefully you do Point & Figure and Barcharts on your stocks and do your homework. That might influence your decision as well. And if I decided I wouldn't buy the stock today? I'd sell all of it.

Nice profit!!
 
cpwill said:
Alright. So this year I broke my own rule, and bought into two individual companies (I always tell people to go for mutual funds) because I thought the industry was a future wave. Thus far (about 7-8 months) I'm up 39% on one and 28% on the other.

Anyone have a consistent strategy for either taking profits and/or pulling out the principle and taking the profit as "free stocks" that works well for them?
Click to expand...

Just set a floor with your broker. If the stock loses, say, 10% then there is an automatic sell order generated.
 
Rule #1: Don't lose money.
Rule #2: Don't forget Rule #1.

Those two from Warren Buffet. Oh, and don't go looking for advice about your money on the internet.
This year 2013, damn near everything went up so don't think because one person brags about his or her recent success it of any value. "All ships rise in flood waters."
 
rhinefire said:
Rule #1: Don't lose money.
Rule #2: Don't forget Rule #1.

Those two from Warren Buffet. Oh, and don't go looking for advice about your money on the internet.
This year 2013, damn near everything went up so don't think because one person brags about his or her recent success it of any value. "All ships rise in flood waters."
Click to expand...

A ship with a hole in it sinks in any level of water.
 
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