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When to sell a stock?
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"\"In my view, it's better to sell when there's a reason to sell, rather than to cap your gains at 8%. I'm assuming you have no such criteria on the other side - i.e. hold your losses down to 8%. That's because what matters is how much you make overall in your portfolio, not how much you make per trade. Example: if you own three stocks, equal amounts - and two go up 20% but one falls 20%. If you sell your gains at 8%, and hold the loser, you have net LOST money. So when do you actually sell? You might say a \"\"fall of 10%\"\" from the last high is good enough to sell. This is called a \"\"trailing\"\" stop, which means if a stock goes from 100 to 120, I'll still hold and sell if it retraces to 108. Needless to say if it had gone from 100 to 90, I would still be out. The idea is to ride the trend for as long as you can, because trends are strong. And keep your trailing stops wide enough for it to absorb natural jiggles, because you may get stopped out of a stock that falls 4% but eventually goes up 200%. Or sell under other conditions: if the earnings show a distinct drop, or the sector falls out of favor. Whenever you decide to sell, also consider what it would take for you to buy the stock back - increased earnings, strong prices, a product release, whatever. Because getting out might seem like a good thing, but it's just as important to not think of it as saying a stock is crappy - it might just be that you had enough of one ride. That doesn't mean you can't come back for another one.\"",
"\"Obviously a stock that's hit a high is profit waiting to be taken, be safe, take the money, Sell Sell Sell!! Ah.. but wait, they say \"\"run your winners, cut your losers\"\", so here this stock is a winner... keep on to it, Hold Hold Hold!!!!! Of course, if you're holding, then you think it's going to return even higher.... Buy Buy Buy!!!! So, hope that's clears things up for you - Sell, Hold, or maybe Buy :-) A more serious answer is not ever to worry about past performance, if its gone past a reasonable valuation then consider selling, but never care about selling out just because its reached some arbitrary share price. If you are worried about losses, you might like to set a trailing stop and sell if it drops, but if you're a LTBH type person, just keep it until you feel it is overvalued compared to its fundamentals.\"",
"Don't sell. Ever. Well almost. A number of studies have shown that buying equal amounts of shares randomly will beat the market long term, and certainly won't do badly. Starting from this premise then perhaps you can add a tiny bit extra with your skill... maybe, but who knows, you might suck. Point is when buying you have the wind behind you - a monkey would make money. Selling is a different matter. You have the cost of trading out and back in to something else, only to have changed from one monkey portfolio to the other. If you have skill that covers this cost then yes you should do this - but how confident are you? A few studies have been done on anonymised retail broker accounts and they show the same story. Retail investors on average lose money on their switches. Even if you believe you have a real edge on the market, you're strategy still should not just say sell when it drops out of your criteria. Your criteria are positive indicators. Lack of positive is not a negative indicator. Sell when you would happily go short the stock. That is you are really confident it is going down. Otherwise leave it.",
"\"If you are already invested in a particular stock, I like JoeTaxpayer's answer. Think about it as if you are re-buying the stocks you own every day you decide to keep them and don't set emotional anchor points about what you paid for them or what they might be worth tomorrow. These lead to two major logical fallacies that investor's commonly fall prey to, Loss Aversion and Sunk Cost, both of which can be bad for your portfolio in the long run. To avert these natural tendencies, I suggest having a game plan before you purchase a stock based on on your investment goals for that stock. For example a combination of one or more of the following: I'm investing for the long term and I expect this stock to appreciate and will hold it until (specific event/time) at which point I will (sell it all/sell it gradually over a fixed time period) right around the time I need the money. I'm going to bail on this stock if it falls more than X % from my purchase price. I'm going to cash out (all/half/some) of this investment if it gains more than x % from my purchase price to lock in my returns. The important thing is to arrive at a strategy before you are invested and are likely to be more emotional than rational. Otherwise, it can be very hard to sell a \"\"hot\"\" stock that has suddenly jumped in price 25% because \"\"it has momentum\"\" (gambler's fallacy). Conversely it can be hard to sell a stock when it drops by 25% because \"\"I know it will bounce back eventually\"\" (Sunk Cost/Loss Aversion Fallacy). Also, remember that there is opportunity cost from sticking with a losing investment because your brain is saying \"\"I really haven't lost money until I give up and sell it.\"\" When logically you should be thinking, \"\"If I move my money to a more promising investment I could get a better return than I am likely to on what I'm holding.\"\"\"",
"\"This answer relies on why you are holding shares of a company in the first place. So let's address that: So does this mean you would like to vote with your shares on the directions the company takes? If so, your reasons for selling would be different from the next speculator who only is interested in share price volatility. Regardless of your participation in potential voting rights associated with your share ownership, a different reason to sell is based on if your fundamental reasons for investing in the company have changed. Enhancements on this topic include: Trade management, how to deal with position sizes. Buying and selling partial positions based on price action while keeping a core long term position, but this is not something \"\"long term investors\"\" generally put too much effort in. Price targets, start your long term investment with a price target in mind, derived from a future market cap based on your initial fundamental analysis of the company's prospects. And finally, there are a lot of things you can do with a profitable investment in shares.\"",
"Depends entirely on the stock and your perception of it. Would you buy it at the current price? If so, keep it. Would you buy something else? If so, sell it and buy that.",
"If you feel comfortable taking an 8% gain on your stocks, then yes, you should sell. It is generally a good idea to know when you want to sell (either a price or %) before you ever actually buy the stocks. That helps from getting emotional and making poor decisions.",
"If you know you have picked a bad stock, the sooner you sell the better. There is a tendency to hold a bad stock in the hope that it will pick up again. Most of us fall into this trap. The best way one needs to look at things are;",
"You sell when you think the stock is over valued, or you need the money, or you are going to need the money in the next 5 years. I buy and hold a lot. I bought IBM in 8th grade 1980. I still own it. I bought 3 share it from $190 and its now worth $5,000 do to dividend reinvestment and splits. That stock did nothing for a thirteen years except pay a dividend but then it went up by 1800% the next 20 and paid dividends. So I agree with other posters the whole pigs get slaughtered thing is silly and just makes fund managers more money. Think if you bought aapl at $8 and sold at $12. The thing went to 600 and split 7-1 and is back to $120. My parents made a ton holding Grainger for years and I have had good success with MMM and MSFT owning those for decades.",
"How about this rule? Sell 10% of your shares every time they double in price. (of course, only buy stocks that repeatedly double in price)",
"You should constantly look at your investment portfolio and sell based on future outlook. Don't get emotional. Selling a portfolio of stocks at once without a real reason is foolish. If you have a stock that's up, and circumstances make you think it's going to go up further, hold it. If prospects are not so good, sell it. Also, you don't have to buy or sell everything at once. If you've made money on a stock and want to realize those gains, sell blocks as it goes up. Stay diversified, monitor your portfolio every week and keep a reserve of cash to use when opportunity strikes. If you have more stocks or funds than you can keep current on every week, you should consolidate your positions over time.",
"Try to find out (online) what 'the experts' think about your stock. Normally, there are some that advise you to sell, some to hold and some to buy. Hold on to your stock when most advise you to buy, otherwise, just sell it and get it over with. A stock's estimated value depends on a lot of things, the worst of these are human emotions... People buy with the crowd and sell on panic. Not something you should want to do. The 'real' value of a stock depends on assets, cash-flow, backlog, benefits, dividends, etc. Also, their competitors, the market position they have, etc. So, once you have an estimate of how much the stock is 'worth', then you can buy or sell according to the market value. Beware of putting all your eggs in one basket. Look at what happened to Arthur Andersen, Lehman Brothers, Parmalat, Worldcom, Enron, etc.",
"I would not sell unless the stock is starting to fall in price. If you are a long term investor you can review the weekly chart on a weekly basis to determine if the stock is still up-trending. Regarding HD below is a weekly chart for the last 4 years: Basically if the price is making Higher Highs (HH) and Higher Lows (HL) it is up-trending. If it starts to make Lower Lows (LL) followed by Lower Highs (LH) then the uptrend is over and the stock could be entering a downtrend. With HD, the price has been up-trending but seems to now be hitting some headwinds. It has been making some HHs followed by some HLs throughout the last 2 years. It did make a LL in late August 2015 but then recovered nicely to make a new HH, so the uptrend was not broken. In early November 2016 it made another LL but this time it seems to be followed by a LH in mid-December 2016. This could be clear evidence that the uptrend may be ending. The final confirmation would be if the price drops below the early November low of $119.20 (the orange line). If price drops below this price it would be confirmation that the uptrend is over and this should be the point at which you should sell your HD shares. You could place an automatic stop loss order just below $119.20 so that you don't even need to monitor the stock frequently. Another indication that the uptrend may be in trouble is the divergence between the HHs of the price and the peaks of a momentum indicator (in this case the MACD). The two sloping red lines show that the price made HHs in April and August 2016 whilst the momentum indicator made LHs at these peaks in the price. As the lines are sloping in different directions it is demonstrating negative divergence, which means that the momentum of the uptrend is slowing down and can act as an early warning system to be more cautious in the near future. So the question you could be asking is when is a good time to sell out of HD (or at least some of your HD to rebalance)? Why sell something that is still increasing in price? Only sell if you can determine that the price will not be increasing anymore in the near to medium term.",
"Hopefully, before you invested in this stock, you evaluated the company. You looked at the financial information about the company and where the company was headed, and evaluated whether the stock was undervalued or overvalued. Hopefully, you determined that the stock was undervalued at the time you bought it. The thing to do now is to reevaluate the stock. Do you think the stock is overvalued or undervalued right now? If you didn't own it, would you buy it today? Instead of looking at the past performance of the stock, you want to try to determine which direction the stock will go from today. If you wouldn't buy it today at it's current price, then you should sell. If you have no idea how to do this evaluation, neither do I. For me, with the investing knowledge I have right now, investing in an individual stock would be way too risky. If you don't know how to evaluate a stock and determine if it is a good buy or not, then you should stay away from individual stocks and instead invest in stock mutual funds, which lower the risk by diversifying over lots of stocks.",
"Unfortunately I believe there is not a good answer to this because it's not a well posed problem. It sounds like you are looking for a theoretically sound criteria to decide whether to sell or hold. Such a criteria would take the form of calculating the cost of continuing to hold a stock and comparing it to the transactions cost of replacing it in your portfolio. However, your criteria for stock selection doesn't take this form. You appear to have some ad hoc rules defining whether you want the stock in your portfolio that provide no way to calculate a cost of having something in your portfolio you don't want or failing to have something you do want. Criteria for optimally rebalancing a portfolio can't really be more quantitative than the rules that define the portfolio.",
"why sell? Because the stock no longer fits your strategy. Or you've lost faith in the company. In our case, it's because we're taking our principal out and buying something else. Our strategy is, basically, to sell (or offer to sell) after the we can sell and get our principal out, after taxes. That includes dividends -- we reduce the sell price a little with every dividend collected.",
"Buy and hold doesn't have an exact definition, as far as I know. In my opinion, it's offered as a contrast to those who trade too frequently, or panic every time the market drops 2%. For the general market, e.g. your S&P index holdings. You sell to rebalance to your desired asset allocation. As a personal example, at 50, I was full up invested, 95%+ in stocks. When my wife and I were retired (i.e. let go from company, but with no need to go back to work) I started shifting to get to a more sane allocation, 80/20. The ideal mix may be closer to 60/40. Also, there are times the market as a whole is overvalued as measure by P/E and/or CAPE, made popular by Nobel Prize winning Robert Shiller. During these times, an allocation shift might make sense. For the individual stocks, you had best have a strategy when you buy. Why did you buy XYZ? Because they had promise, decent company with a good outlook for their product? Now that they are up 300%, can they keep gaining share or expand their market? Sometimes you can keep raising the bar, and keep a company long term, really long. Other times, the reason you bought no longer applies, they are at or above the valuation you hoped to achieve. Note - I noticed from another question, the OP is in the UK. I answer this my from US centric view, but it should still apply to OP in general. The question was not tagged UK when I replied.",
"\"Though it seems unintuitive, you should rationally ignore the past performance of this stock (including the fact that it's at its 52-week high) and focus exclusively on factors that you believe should affect it moving forward. If you think it's going to go up even further, more than the return on your other options for where to put the money, keep the stock. If you think it's peaked and will be going down, now's a good time to sell. To put it another way: if you didn't already have this stock, would you buy it today? Your choice is just about the same: you can choose between a sum of cash equal to the present market value of the shares, OR the shares. Which do you think is worth more? You also mentioned that you only have 10 stocks in the portfolio. Some are probably a larger percentage than others, and this distribution may be different than what you want in your portfolio. It may be time to do some rebalancing, which could involve selling some shares where your position is too large (as a % of your portfolio) and using the proceeds toward one or more categories you're not as invested in as you would like to be. This might be a good opportunity to increase the diversity in your portfolio. If part of your reward and motivation for trading is emotional, not purely financial, you could sell now, mark it as a \"\"win,\"\" and move on to another opportunity. Trading based on emotions is not likely to optimize your future balance, but not everybody is into trading or money for money's sake. What's going to help you sleep better at night and help boost your quality of life? If holding the stock will make you stress and regret a missed opportunity if it goes down, and selling it will make you feel happy and confident even if it still goes up more (e.g. you interpret that as further confirming that you made a good pick in the first place), you might decide that the risk of suboptimal financial returns (from emotion-based trading) is acceptable. As CQM points out, you could also set a trailing sell order to activate only when the stock is a certain percentage or dollar amount below whatever it peaks at between the time you set the order and the time it fires/expires; the activation price will rise with the stock and hold as it falls.\"",
"You should know when to sell your shares before you buy them. This is most easily done by placing a stop loss conditional order at the same time you place your buy order. There are many ways to determine at what level to place your stop losses at. The easiest is to place a trailing stop loss at a percentage below the highest close price, so as the price reaches new highs the trailing stop will rise. If looking for short to medium term gains you might place your trailing stop at 10% below the highest close, whilst if you were looking for more longer term gains you should probably place a 20% trailing stop. Another way to place your stops for short to medium term gains is to keep moving your trailing stop up to just below the last trough in an existing uptrend.",
"\"You should distinguish between the price and the value of a company: \"\"Price is what you pay, value is what you get\"\". Price is the share price you pay for one share of the company. Value is what a company is worth (based on fundamental analysis, one of the principles of value investing). I would recommend selling the stock only if the company's value has deteriorated due to fundamental changes (e.g. better products from competitors, declining market) and its value is lower than the current share price.\"",
"There is an approach which suggests that each weekend you should review your positions as if they were stocks to be considered for purchase on Monday. I can't offer advice on picking stocks, but it's fair to say that you need to determine if the criteria you used to buy it the first time is still valid. I own a stock trading at over $300, purchased for $5. Its P/E is still reasonable as the darn E just keeps rising. Unless your criteria is to simply grab small gains, which in my opinion is a losing strategy, an 8% move up would never be a reason to sell, in and of itself. Doing so strikes me as day trading, which I advise againgst.",
"I am a believer in stocks for the long term, I sat on the S&P right though the last crash, and am 15% below the high before the crash. For individual stocks, you need to look more closely, and often ask yourself about its valuation. The trick is to buy right and not be afraid to sell when the stock appears to be too high for the underlying fundamentals. Before the dotcom bubble I bought Motorola at $40. Sold some at $80, $100, and out at $120. Coworkers who bought in were laughing as it went to $160. But soon after, the high tech bubble burst, and my sales at $100 looked good in hindsight. The stock you are looking at - would you buy more at today's price? If not, it may be time to sell at least some of that position.",
"\"Selling as well as buying a stock are part science and part art form. I remember once selling a stock at its 52 week high too. That particular stock \"\"quadrupled\"\" in value over the next 52 weeks. Mind you I made 50% ROI on the stock but my point is that none of us have a crystal ball on whether a particular stock will ever stop or start going up or stop or start going down. If someone had those answers they wouldn't be telling you they would be practicing them to make more money! Make up your mind what you want to make and stick by your decisions. Bulls make money when stocks go up and Bears make money when they go down but pigs don't make money. -RobF\"",
"Personally, I have been in that situation too often that now I am selling at the first tick down! (not exactly but you get the idea..) I have learned over the years to not fall in love with any stock, and this is a very hard thing to do. Limit your losses and take profit when you are satisfied with them. Nothing prevents you from buying back in this stock but why buying when it is going down? Just my 2 cents.",
"I bought 1000 shares of a $10 stock. When it doubled, I sold half, no need to be greedy. I watched the shares split 2 for one, and sold as it doubled and doubled again. In the end, I had $50,000 in cash pulled out and still had 100 shares. The shares are now worth $84K since they split 7 for one and trade near $120. Had I just kept the shares till now, no sales, I'd have 14,000 shares of Apple worth $1.68M dollars. $130K for an initial $10,000 investment is nothing to complain about, but yes, taking a profit can be the wrong thing. 25%? Was that all the potential the company had? There's one question to ask, not where is the price today compared to last year or two years ago, but what are the company's prospects. Is the reason I bought them still valid? Look at your investment each quarter as if you were making the decision that day. I agree, diversification is important, so the choice is only hold or sell, not to buy more of a good company, because there are others out there, and the one sane thing Cramer says that everyone should adhere to is to not put your eggs in one basket.",
"\"It's impossibly difficult to time the market. Generally speaking, you should buy low and sell high. Picking 25% as an arbitrary ceiling on your gains seems incorrect to me because sometimes you'll want to hold a stock for longer or sell it sooner, and those decisions should be based on your research (or if you need the money), not an arbitrary number. To answer your questions: If the reasons you still bought a stock in the first place are still valid, then you should hold and/or buy more. If something has changed and you can't find a reason to buy more, then consider selling. Keep in mind you'll pay capital gains taxes on anything you sell that is not in a tax-deferred (e.g. retirement) account. No, it does not make sense to do a wash sale where you sell and buy the same stock. Capital gains taxes are one reason. I'm not sure why you would ever want to do this -- what reasons were you considering? You can always sell just some of the shares. See above (and link) regarding wash sales. Buying more of a stock you already own is called \"\"dollar cost averaging\"\". It's an effective method when the reasons are right. DCA minimizes variance due to buying or selling a large amount of shares at an arbitrary single-day price and instead spreads the cost or sale basis out over time. All that said, there's nothing wrong with locking in a gain by selling all or some shares of a winner. Buy low, sell high!\"",
"\"I'm not sure what you expect in terms of answers, but it depends on personal factors. It pretty well has to depend on personal factors, since otherwise everyone would want to do the same thing (either everyone thinks the current price is one to sell at, or everyone thinks it's one to buy at), and there would be no trades. You wouldn't be able to do what you want, except on the liquidity provided by market makers. Once that's hit, the price is shifting quickly, so your calculation will change quickly too. Purely in terms of maximising expected value taking into account the time value of money, it's all about the same. The market \"\"should\"\" already know everything you know, which means that one time to sell is as good as any other. The current price is generally below the expected acquisition price because there's a chance the deal will fall through and the stock price will plummet. That's not to say there aren't clever \"\"sure-fire\"\" trading strategies around acquisitions, but they're certain to be based on more than just timing when to sell an existing holding of stock. If you have information that the market doesn't (and assuming it is legal to do so) then you trade based on that information. If you know something the market doesn't that's going to be good for price, hold. If you know something that will reduce the price, sell now. And \"\"know\"\" can be used in a loose sense, if you have a strong opinion against the market then you might like to invest based on that. Nothing beats being paid for being right. Finally, bear in mind that expected return is not the same as utility. You have your own investment goals and your own view of risk. If you're more risk-averse than the market then you might prefer to sell now rather than wait for the acquisition. If you're more risk-prone than the market then you might prefer a 90% chance of $1 to 90c. That's fine, hold the stock. The extreme case of this is that you might have a fixed sum at which you will definitely sell up, put everything into the most secure investments you can find, and retire to the Caribbean. If that's the case then you become totally risk-averse the instant your holding crosses that line. Sell and order cocktails.\"",
"\"In a perfect world of random stock returns (with a drift) there is no reason to \"\"take profit\"\" by exiting a position because there is no reason to think price appreciation will be followed by decline. In our imperfect world, there are many rules of thumb that occasionally work but if any one of them works consistently over a long period of time, everyone starts to practice that rule and then it stops working. Therefore, there are no such rules of thumb that work reliably and consistently over long periods of time and are expected to continue doing so. Finding such a rule is and always has been a moving target. The rational, consistently sensible reasons to sell a stock are: These rules are very different from my interpretation of the \"\"walk with your chips\"\" behavior mentioned in your question.\"",
"It depends on what your investment goals are. Are you investing for the short-term or the long-term? What was your reason for investing in these stocks in the first place? Timing short-term fluctuations in the market is very difficult, so if that's your goal, I wouldn't count on being able to sell and buy back in at exactly the right time. Rather, I think you should think about what your investment rationale was in the first place, and whether or not that rationale still holds. If it does, then hold on to the stocks. If it doesn't, then sell.",
"In my opinion, the average investor should not be buying individual stocks. One reason why is that the average investor is not capable of reading financial statements and evaluating whether a stock is overpriced or underpriced. As such, they're often tempted to make buy/sell decisions based solely on the current value of a stock as compared to the price at which they bought it. The real reasons to buy (or sell) a stock is the expectation of future growth of the company (or continued profit and expected dividends). If you aren't able to analyze a company's financial statements and business plan, then you really aren't in a position to evaluate that company's stock price. So instead of asking whether to sell based on a recent drop in stock price, you should be investigating why the stock price is falling, and deciding whether those reasons indicate a trend that you expect to continue. If you buy and sell stocks based solely on recent trends in the stock price, you probably will end up buying stocks that have recently risen and selling stocks that have recently fallen. In that case, you are buying high and selling low, which is a recipe for poor financial outcomes.",
"You sell any investment because you need to do something else with the money -- rebalance your investments, buy something, pay off a debt....",
"\"I reread your question. You are not asking about the validity of selling a particular stock after a bit of an increase but a group of stocks. We don't know how many. This is the S&P for the past 12 months. Trading at 1025-1200 or so means that 80-100 points is an 8% move. I count 4 such moves during this time. The philosophy of \"\"you can't go wrong taking a gain\"\" is tough for me to grasp as it offers no advice on when to get (back) in. Studies by firms such as Dalbar (you can google for some of their public material) show data that supports the fact that average investors lag the market by a huge amount. 20 years ending 12/31/08 the S&P returned 8.35%, investor equity returns showed 1.87%. I can only conclude that this is a result of buying high and selling low, not staying the course. The data also leads me to believe the best advice one can give to people we meet in these circumstances is to invest in index funds, keeping your expenses low as you can. I've said this since read Jack Bogle decades ago, and this advice would have yielded about 8.25% over the 20 years, beating the average investor by far, by guaranteeing lagging the average by 10 basis points or so. A summary of the more extensive report citing the numbers I referenced is available for down load - QAIB 2015 - Quantitative Analysis of Investor Behavior. It's quite an eye-opener and a worthy read. (The original report was dated 2009, but the link broke, so I've updated to the latest report, 2015)\"",
"Have the reasons you originally purchased the stock changed? Is the company still sound? Does the company have a new competitor? Has the company changed the way they operate? If the company is the same, except for stock price, why would you change your mind on the company now? ESPECIALLY if the company has not changed, -- but only other people's PERCEPTION of the company, then your original reasons for buying it are still valid. In fact, if you are not a day-trader, then this COMPANY JUST WENT ON SALE and you should buy more. If you are a day trader, then you do care about the herd's perception of value (not true value) and you should sell. DAY TRADER = SELL BUY AND HOLD (WITH INTELLIGENT RESEARCH) = BUY MORE",
"Simply if your stock is still rising in price keep it. If it is falling in price sell it and pay off your mortgage. To know when to do this is very easy. If it is currently rising you can put a trailing stop loss on it and sell it when it drops and hits your stop loss. A second easy method is to draw an uptrend line under the increasing price and then sell when the price drops down below the uptrend line, as per the chart below. This will enable you to capture the bulk of the price movement upward and sell before the price drops too far down. You can then use the profits (after tax) to pay down your mortgage. Of course if the price is currently in a downtrend sell it ASAP.",
"Here's an easy test... Look at the investments in your portfolio and ask yourself whether if you had the cash value, would you buy those same investments today, because effectively that is what you are doing when you continue to hold. If the answer is no, sell and pick something else. Above all else, don't react to market swings, in most cases you are going to get it wrong and wind up losing more by making emotional decisions.",
"My thoughts are that if you've seen considerable growth and the profit amassed would be one that makes sense, you would have to seriously consider selling NOW because it could take yeoman's time to mimic that profit in the next 10 quarters or so. To analogize; If you bought a house for 100k and we're renting it for say 1,000/month and we're making $ 250/month profit and could sell it now for 125k, it would take you 100 months to recoup that $25k profit (or 8 years 4 months). Doesn't it make sense to sell now? You would have that profit NOW and could invest it somewhere else without losing that period of time, and TIME is the emphasis here.",
"\"The only general rule is \"\"If you would buy the stock at its current price, hold and possibly buy. If you wouldn't, sell and buy something you believe in more strongly.\"\" Note that this rule applies no matter what the stock is doing. And that it leaves out the hard work of evaluating the stock and making those decisions. If you don't know how to do that evaluation to your own satisfaction, you probably shouldn't be buying individual stocks. Which is why I stick with index funds.\"",
"The cost to you for selling is 3/8% of a years salary, this is what you won't get if you sell. Tough to calculate the what-if scenarios beyond this, since I can't quantify the risk of a price drop. Once the amount in he stock is say,10%, of a years salary, if you know a drop is coming, a sale is probably worth it, for a steep drop. My stronger focus would be on how much of your wealth is concentrated in that one stock, Enron, and all.",
"\"If you're asking this question, you probably aren't ready to be buying individual stock shares, and may not be ready to be investing in the market at all. Short-term in the stock market is GAMBLING, pure and simple, and gambling against professionals at that. You can reduce your risk if you spend the amount of time and effort the pros do on it, but if you aren't ready to accept losses you shouldn't be playing and if you aren't willing to bet it all on a single throw of the dice you should diversify and accept lower potential gain in exchange for lower risk. (Standard advice: Index funds.) The way an investor, as opposed to a gambler, deals with a stock price dropping -- or surging upward, or not doing anything! -- is to say \"\"That's interesting. Given where it is NOW, do I expect it to go up or down from here, and do I think I have someplace to put the money that will do better?\"\" If you believe the stock will gain value from here, holding it may make more sense than taking your losses. Specific example: the mortgage-crisis market crash of a few years ago. People who sold because stock prices were dropping and they were scared -- or whose finances forced them to sell during the down period -- were hurt badly. Those of us who were invested for the long term and could afford to leave the money in the market -- or who were brave/contrarian enough to see it as an opportunity to buy at a better price -- came out relatively unscathed; all I have \"\"lost\"\" was two years of growth. So: You made your bet. Now you have to decide: Do you really want to \"\"buy high, sell low\"\" and take the loss as a learning experience, or do you want to wait and see whether you can sell not-so-low. If you don't know enough about the company to make a fairly rational decision on that front, you probably shouldn't have bought its stock.\"",
"\"I have heard that investing more money into an investment which has gone down is generally a bad idea*. \"\"Throwing good money after bad\"\" so to speak. This is over simplified statement to explain the concept. What is essentially says is; Say I hold stocks of XYZ; 100 units worth say USD 1000. This has lost me x% [say 50%]. The general tendency is to buy 100 more units in anticipation / hope that the price will go up. This is incorrect. However on case to case basis, this maybe the right decisions. On a periodic basis [or whenever you want to invest more money]; say you have USD 1000 and did not have the stock of XYZ, will you buy this at current price and outlook of the company. If the answer is Yes, hold the stock [or buy more], if the answer is no sell the stock at current market price and take the loss. The same applies when the price has appreciated. If you have USD 1000; given the current price and future outlook, will you buy the specific stock. If yes, hold the stock [or buy more], if answer is no sell the stock and book profit. Off-course I have not overlaid the various other considerations when buying stocks like diversification, risk profiles of individual stocks / segments, tax implications etc that are also essential even if you decide to buy or sell specific stock.\"",
"I agree with this. I like to buy stocks that are priced low according to value investing principles but set limits to sell if the stock happens to get priced at a point that exceeds X% annualized return, for instance 15% or 30% depending on preference. If the price goes up, I cash out and find the next best value stock and repeat. If the price does not go up, then I hold it which is fine because I only buy what I'm comfortable with holding for the long term. I tend to prefer stocks that have a dividend yield in the 2-6% range so I can keep earning a return. Also I too like the look of MCD. GE looks good as well, from this perspective.",
"\"My theory is that for every stock you buy, you should have an exit strategy and follow it. It is too hard to let emotions rule if you let your default strategy be \"\"let's see what happens.\"\" and emotional investing will almost never serve you well. So before buying a stock, set a maximum loss and maximum gain that you will watch for on the stock, and when it hits that number sell. At the very least, when it hits one of your numbers, consciously make a decision that you are effectively buying it again at the current price if you decide to stay in. When you do this, set a new high and low price and repeat the above strategy.\"",
"\"You have to calculate the total value of all shares and then ask yourself \"\"Would I invest that amount of money in this stock?\"\" If the answer is yes, then only sell what you need to sell. Take the $3k loss against your income, if you have no other gains. If you would not invest that amount of cash in that stock, then sell it all right now and carry forward the excess loss every year. Note at any point you have capital gains you can offset all of them with your loss carryover (not just $3k).\"",
"\"The best strategy for RSU's, specifically, is to sell them as they vest. Usually, vesting is not all in one day, but rather spread over a period of time, which assures that you won't sell in one extremely unfortunate day when the stock dipped. For regular investments, there are two strategies I personally would follow: Sell when you need. If you need to cash out - cash out. Rebalance - if you need to rebalance your portfolio (i.e.: not cash out, but reallocate investments or move investment from one company to another) - do it periodically on schedule. For example, every 13 months (in the US, where the long term cap. gains tax rates kick in after 1 year of holding) - rebalance. You wouldn't care about specific price drops on that day, because they also affect the new investments. Speculative strategies trying to \"\"sell high buy low\"\" usually bring to the opposite results: you end up selling low and buying high. But if you want to try and do that - you'll have to get way more technical than just \"\"dollar cost averaging\"\" or similar strategies. Most people don't have neither time nor the knowledge for that, and even those who do rarely can beat the market (and never can, in the long run).\"",
"If you own the stock today, it doesn't matter what it traded for yesterday. If XYZ is trading for $40 and you own it, ask yourself if it's worth buying today for $40. If it isn't, you may want to consider selling it and buying something that is worth $40.",
"\"I primarily intend to add on to WBT's answer, which is good. It has been shown that \"\"momentum\"\" is a very real, tangible factor in stock returns. Stocks that have done well tend to keep doing well; stocks that are doing poorly tend to keep doing poorly. For a long-term value investor, of course fundamental valuation should be your first thing to look at - but as long as you're comfortable with the company's price as compared to its value, you should absolutely hang onto it if it's been going up. The old saying on Wall Street is \"\"Cut your losses, and let your winners ride.\"\" As WBT said, there may be some tangible emotional benefit to marking your win while you're ahead and not risking that it tanks, but I'd say the odds are in your favor. If an undervalued company starts rising in stock price, maybe that means the market is starting to recognize it for the deal it is. Hang onto it and enjoy the fruits of your research.\"",
"If the price has gone up from what it was when the person bought, he may sell to collect his profit and spend the money. If someone intends to keep his money in the market, the trick is that you don't know when the price of a given stock will peak. If you could tell the future, sure, you'd buy when the stock was at its lowest point, just before it started up, and then sell at the highest point, just before it started down. But no one knows for sure what those points are. If a stockholder really KNOWS that demand is increasing and the price WILL go up, sure, it would be foolish to sell. But you can never KNOW that. (Or if you have some way that you do know that, please call me and share your knowledge.)",
"When you sell a stock that you own, you realize gains, or losses. Short-term gains, realized within a year of buying and selling an asset, are taxed at your maximum (or marginal) tax rate. Long term-gains, realized after a year, are taxed at a lower, preferential rate. The first thing to consider is losses. Losses can be cancelled against gains, reducing your tax liability. Losses can also be carried over to the next tax year and be redeemed against those gains. When you own a bunch of the same type of stock, bought at different times and prices, you can choose which shares to sell. This allows you to decide whether you realize short- or long-term gains (or losses). This is known as lot matching (or order matching). You want to sell the shares that lost value before selling the ones that gained value. Booking losses reduces your taxes; booking gains increases them. If faced with a choice between booking short term and long term losses, I'd go with the former. Since net short-term gains are taxed at a higher rate, I'd want to minimize the short-term tax liability before moving on to long-term tax liability. If my remaining shares had gains, I'd sell the ones purchased earliest since long-term gains are taxed at a lower rate, and delaying the booking of gains converts short-term gains into long-term ones. If there's a formula for this, I'd say it's (profit - loss) x (tax bracket) = tax paid",
"You talk about an individual not being advised to sell (or purchase) in response to trends in the market in such a buy and hold strategy. But think of this for a moment: You buy stock ABC for $10 when both the market as a whole and stock ABC are near the bottom of a bear market as say part of a value buying strategy. You've now held stock ABC for a number of years and it is performing well hitting $50. There is all good news about stock ABC, profit increases year after year in double digits. Would you consider selling this stock just because it has increased 400%. It could start falling in a general market crash or it could keep going up to $100 or more. Maybe a better strategy to sell ABC would be to place a trailing stop of say 20% on the highest price reached by the stock. So if ABC falls, say in a general market correction, by less than 20% off its high and then rebounds and goes higher - you keep it. If ABC however falls by more than 20% off its high you automatically sell it with your stop loss order. You may give 20% back to the market if the market or the stock crashes, but if the stock continues going up you benefit from more upside in the price. Take AAPL as an example, if you bought AAPL in March 2009, after the GFC, for about $100, would you have sold it in December 2011 when it hit $400. If you did you would have left money on the table. If instead you placed a trailing stop loss on AAPL of 20% you would have been still in it when it hit its high of $702 in September 2012. You would have finally been stopped out in November 2012 for around the $560 mark, and made an extra $160 per share. And if your thinking, how about if I decided to sell AAPL at $700, well I don't think many would have picked $700 as the high in hindsight. The main benefit of using stop losses is that it takes your emotions out of your trading, especially your exits.",
"If the stock starts to go down DO NOT SELL!! My reasoning for this is because, when you talk about the stock market, you haven't actually lost any money until you sell the stock. So if you sell it lower than you bought it, you loose money. BUT if you wait for the stock to go back up again, you will have made money.",
"Buy low, sell high. I think a lot of people apply that advice wrongly. Instead of using this as advice about when to buy and when to sell, you should use it as advice about when not to buy and when not to sell. Don't buy when P/Es cannot support the current stock price. Don't sell when stocks have already fallen due to a market panic. Don't follow the herd or you will get trampled when they reverse direction in a panic. If you are smart enough to sell ahead of the panics, more power to you, but you should be using more than a 52-week high on a graph to make that decision.",
"Ignore sunk costs and look to future returns. Although it feels like a loss to exit an investment from a loss position, from a financial standpoint you should ignore the purchase price. If your money could be better invested somewhere else, then move it there. You shouldn't look at it as though you'll be more financially secure because you waited longer for the stock to reach the purchase price. That's psychological, not financial. Some portion of your invested wealth is stuck in this particular stock. If it would take three months for the stock to get back to purchase price but only two months for an alternate investment to reach that same level, then obviously faster growth is better. Your goal is greater wealth, not arbitrarily returning certain investments to their purchase price. Investments are just instrumental. You want more wealth. If an investment is not performing, then ignore purchase price and sunken costs. Look at the reasonable expectations about an investment going forward.",
"Keep a diary, before buying write down why are you buying the stock, how long do you plan to keep it. Put down reasons when you would sell it. For example you buy a stock because it has lot of cash reserve, it is a focused company, good management. You would sell when management leaves or it starts to use its cash for acquisition that are not fitting in profile.",
"What's your basis? If you have just made a 50% gain, maybe you should cash out a portion and hold the rest. Don't be greedy, but don't pass up an opportunity either.",
"The best thing to do to avoid this is not to sell as you've described. What purpose does it solve? If you're speculating, set a price at which you want to cash out and put a limit order. If you're a long term investor, then unless something fundamental has changed - why would you sell?",
"\"I bought 1000 shares of Apple, when it was $5. And yet, while the purchase was smart, the sales were the dumbest of my life. \"\"You can't go wrong taking a profit\"\" \"\"When a stock doubles sell half and let it ride\"\", etc. It doubled, I sold half, a $5000 gain. Then it split, and kept going up. Long story short, I took gains of just under $50,000 as it rose, and had 100 shares left for the 7 to 1 split. The 700 shares are worth $79,000. But, if I simply let it ride, 1000 shares split to 14,000. $1.4M. I suppose turning $5,000 into $130K is cause for celebration, but it will stay with me as the lost $1.3M opportunity. Look at the chart and tell me the value of selling stocks at their 52 week high. Yet, if you chart stocks heading into the dotcom bubble, you'll see a history of $100 stocks crashing to single digits. But none of them sported a P/E of 12.\"",
"\"The price at which a stock was purchased is a sunk cost--that is, you cannot go back in time and reverse the decision you made to purchase that stock. Another example of a sunk cost would be purchasing a non-refundable, non-transferable movie ticket. Sunk costs have the tendency to create a cognitive bias in which we feel that the amount we paid at some point in the past should have some sort of bearing on the decision we make now--the purchaser of the ticket feels he must go see the movie even if he no longer wishes too, lest the ticket \"\"go to waste\"\"... the investor hopelessly clings to a battered stock for that tiny chance that just maybe some day it will return to its former glory. This is referred to as the \"\"sunk cost fallacy\"\" and is considered to be irrational behavior by economists. Keeping this in mind, your hopes and dreams for the stock at the time you purchased it should have no bearing on the decision you make now. Similarly, whether the stock has risen or fallen in price since your purchase date should have no bearing. Instead, you must consider what you expect the stock to do from this very moment on into the future--that is, you must act at the margin. You've indicated that you are faced with two choices--sell the stock now, incur the loss, but benefit from the tax break (Option A). This benefit is quite easily quantifiable--it is your marginal tax rate multiplied by the additive inverse of the loss (assuming you have/will have other gains to offset). Let's just assume that you incurred a $1000 loss, at a marginal tax rate of 20%, which means your tax benefit for the loss is $200. The second choice--to hold the stock in hopes of it rising in price (Option B)--is a bit harder to quantify. You must assume that today is day zero, and that every cent in price the stock rises is a gain to you, and every cent in price the stock looses is a loss to you. If you believe that the stock will rise to a price that will net your more than your tax benefit from option A, then holding the stock is more favorable than selling it at a loss today. Conversely, if you believe this stock will fall even further in the future, or not rise enough to net you $200 (per the example), then Option A is preferable. Granted, there are some additional complications that play into your decision. By selling the stock today, you not only get a tax benefit from the loss, but you've also freed up the funds previously used to purchase that stock to be invested elsewhere (in hopefully a better performing asset). If you choose to stick with your current stock, then the gains you may have netted elsewhere must be considered as an opportunity cost associated with Option B. Finally, the tax benefit is essentially guaranteed (so in our example, a $200 risk free return), while sticking with the stock in Option B still comes with some risk.\"",
"Ask yourself a better question: Under my current investment criteria would I buy the stock at this price? If the answer to that question is yes you need to work out at what price you would now sell out of the position. Think of these as totally separate decisions from your original decisions to buy and at what price to sell. If you would buy the stock now if you didn't already hold a position then you should keep that position as if you had sold out at the price that you had originally seen as your take profit level and bought a new position at the current price without incurring the costs. If you would not buy now by those criteria then you should sell out as planned. This is essentially netting off two investing decisions. Something to think about is that the world has changed and if you knew what you know now then you would probably have set your price limit higher. To be disciplined as an investor also means reviewing current positions frequently and without any sympathy for past decisions.",
"\"You asked for advice, so I'll offer it. Trying to time the market is not a great strategy unless you're sitting in front of a Bloomberg terminal all the time. Another person answering your question suggests the use of index funds; he's likely to be right. Look up \"\"asset allocation.\"\" What you want to do is decide that you want your portfolio to contain, for example: If one of your stock holdings goes up far enough that you're out of your target asset allocation ranges, sell some of it and buy something in another asset class,s so you're back in balance. That way you lock in some profit when things go up, without losing access to potential future profits. The same applies if something goes down; you buy more of that asset class by selling others. This has worked really well for me for 30+ years.\"",
"What is essential is that company you are selling is transparent enough. Because it will provide additional liquidity to market. When I decide to sell, I drop all volume once at a time. Liquidation price will be somewhat worse then usual. But being out of position will save you nerves for future thinking where to step in again. Cold head is best you can afford in such scenario. In very large crashes, there could be large liquidity holes. But if you are on upper side of sigmoid, you will be profiting from selling before that holes appear. Problem is, nobody could predict if market is on upper-fall, mid-fall or down-fall at any time.",
"You should sell all your stock immediately and reinvest the money in index funds. As of right now you're competing against prop trading shops, multinational banks, and the like, who probably know a teensy bit more about that particular stock than you do. I'm sorry, any other advice is missing the point that you shouldn't be picking stocks in the first place.",
"\"I would normally take a cautious, \"\"it depends\"\" approach to answering a question like this, but instead I'm going to give you a blunt opinionated answer based solely on what I would do: Even the crap. Get rid of them and get into the boring low fee mutual funds. I was in a similar situation a few years ago, almost. My retirement accounts were already in funds but my brokerage account was all individual stocks. I decided I didn't really know what I was doing despite being up by 30+% (I recognize that it was mostly due to the market itself being up, I was lucky basically). The way I cashed out was not to sell all at once. I just set up trailing stops on all of them and waited until they hit the stops. The basic idea was that if the market kept going up, the point at which they got sold also went up (it was like a 10% trail I think), and once things started to turn for that stock, they would sell automatically. Sure I sold some at very temporary dips so I missed out on some gains but that's always a risk with a trailing stop and I really didn't care at that point. If I had to do it again, I might forget all that and just sell all at once. But I feel a lot better not being in individual stocks.\"",
"The stock price is not only based on the general market trend and the stock's current profitability and prospects, but is also based on prediction of how the stock's prospects might change in the future. In almost every case, there are professional investors analysing the stock's future prospects and considering whether it's over or under values for its current price. However even professionals can be totally wrong. If you feel like you have a good grasp on whether the stock will have improving or declining prospects over time, then you might be (if you're right) equipped to make a sensible decision on whether to hold the stock or not. If you don't think you have a good understanding about the stock, then an understanding of the general market direction might at least make stock in general worth holding. Otherwise, you are simply taking a punt. If you know of another stock that has better prospects, then ask yourself why you would hold onto the stock that you think will perform worse. But also bear in mind that (in my understanding) research has shown that, on average, people who try to pick stocks rarely do better than a random selection, and more stock trades means more brokerage (which thanks to brokerage losses would mean you will end up doing worse than average unless you really do know better than the market).",
"The answer may be a compromise... if your goal is to make bonds a larger part of your portfolio, sell both stocks and bonds in a 4:1 ratio. or (3:1 or whatever works for you) Also, just as you dollar-cost-average purchases of securities, you can do the same thing on the way out. Plan your sales and spread them over a period of time, especially if you have mutual funds.",
"\"Don't set mental anchor points. I am saying this as a total hypocrite, mind you, it isn't easy to follow that advice. My suggestion would be to look at each investment and ask yourself, \"\"Would I buy that at today's price?\"\", because if you wouldn't you need to sell regardless of whether you are cashing out. Effectively by staying in an investment you no longer believe in, you are giving up the opportunity cost of investing that money in something with a real chance to give you a return, or in your case whatever purpose you have in mind for the cash.\"",
"Sell half. If it's as volatile as you say, sell it all and buy on another dip. No one can really offer targeted advice based on the amount of information you have provided.",
"The main question is, how much money you want to make? With every transaction, you should calculate the real price as the price plus costs. For example, if you but 10 GreatCorp stock of £100 each, and the transaction cost is £20 , then the real cost of buying a single share is in fact buying price of stock + broker costs / amount bought, or £104 in this case. Now you want to make a profit so calculate your desired profit margin. You want to receive a sales price of buying price + profit margin + broker costs / amount bought. Suppose that you'd like 5%, then you'll need the price per stock of my example to increase to 100 + 5% + £40 / 10 = £109. So you it only becomes worth while if you feel confident that GreatCorp's stock will rise to that level. Read the yearly balance of that company to see if they don't have any debt, and are profitable. Look at their dividend earning history. Study the stock's candle graphs of the last ten years or so, to find out if there's no seasonal effects, and if the stock performs well overall. Get to know the company well. You should only buy GreatCorp shares after doing your homework. But what about switching to another stock of LovelyInc? Actually it doesn't matter, since it's best to separate transactions. Sell your GreatCorp's stock when it has reached the desired profit margin or if it seems it is underperforming. Cut your losses! Make the calculations for LovelyCorp's shares without reference to GreatCorp's, and decide like that if it's worth while to buy.",
"The person may just want to get out of that position in order to buy a different stock, he or she feels may go up faster. There is really a lot of reasons.",
"Stocks go down and go back up, that's their nature... Why would you sell on a low point? Stocks are a long term investment. If the company is still healthy, it's very likely you'll be able to sell them with a profit if you wait long enough.",
"Obviously, you should not buy stock when the option is to pay down your debt. However, your question is different. Should you sell to reduce debt. That really depends on your personal situation. If you were planning to sell the stock anyway, go ahead and reduce your loans. Check out how the stock is doing and what the perspectives are. If the stock looks like it's going down, sell... Do you have savings? Unless you do, I should advise to sell the stock at any rate. If you do have savings, are they earning you more (in percentage) than your loans? If they are, keep them...",
"There are some economic signs as there are in all economic and business cycles, such as interest rates rising. However, a more effective way is to actually look at price action itself. The definition of an uptrend is higher highs followed by higher lows. The definition of a downtrend is lower lows followed by lower highs. So if you are looking to invest for the long term you can look at the weekly or even the monthly chart of the market say over the past 10, 15 or 20 years. Using these definitions on say the S&P500 if the price continues to make higher highs and higher lows then stay in the market. If the price makes a lower high than the previous high, then this is a warning sign that the trend may be about to end. The trend has not broken yet but it is a warning sign that it could be ending soon. If the price makes a higher low next followed by a higher high, then the trend continues and you just need to keep an eye on things. If, however, the price makes a lower low after the lower high this is a signal that the uptrend is over and you should get out of the market. If the price makes a lower low directly after a higher high, then be cautious and wait for confirmation that the uptrend is over. If you then get a lower high this is confirmation that the uptrend is over, you would then sell if prices drop below the previous low. If you invest in individual shares then you should keep an eye on the charts for the index and individual shares as well. The index chart will give you an indication if the uptrend is over for the whole market, then you can be more cautious in regards to the individual shares. You can then plan exit points on each individual share if their trends are broken too. If you have stop losses employed and the trend reverses on the index, this would be a good time to tighten your stop losses on individual shares. You can then buy back into the market when you determine that the downtrend is broken and prices start to show higher highs and higher lows again. Will there be occasions when the uptrend reverses and then after a short period starts trending up again, yes there might be, but the worse that will happen is that you pay a bit of extra brokerage to get out and then back into the market, and you might have to pay some capital gains tax on any profits made. But remember no one ever went broke making a profit. The most important thing to remember when investing is to conserve and protect your capital. I would rather pay some extra brokerage and some capital gains tax than see my portfolio drop by 50% or more, then take 5 years or more to recover. And remember, paying tax is a good thing, it means you made money. If you don't want to pay any tax it means you will never make any profits, because if you make profits you will have to pay tax one day.",
"While my margin is not nearly as good as yours, I sell out early. I generally think it's a bad idea to hold any single stock, as they can vary wildly in value. However, as you mention, it's advantageous to hold for one year. Read more about Capital Gains Taxes here and here.",
"\"If they return to their earlier prices Assuming I don't make too many poor choices That's your problem right there: you have no guarantee that stocks, will in fact return to their earlier prices rather than go down some more after the time you buy them. Your strategy only looks good and easy in hindsight when you know the exact point in time when stocks stopped going down and started going up. But to implement it, you need to predict that time, and that's impossible. I would adopt a guideline of \"\"sell when you've made X%, even if it looks like it might go higher.\"\" Congratulations, you've come up with the concept of technical analysis. Now go and read the hundreds of books that have been written about it, then think about why the people who wrote them waste time doing so rather than getting rich by using that knowledge.\"",
"\"You probably bought the stock near the peak because \"\"it's been up a lot lately.\"\" That's the easiest way to lose money. You need to go back and do some basic research. The stock appears to have been expensive around 75. Why is that? The stock seems to be in a \"\"comfortable\"\" level around 45. Why is THAT? Maybe it's too expensive around 45 (based on the P/E ratio, or other measures); maybe you should buy more at 45, where it is cheap, even though 75 is too expensive. The key is to study the stock where it is today (45-47). Ask yourself what you would do at TODAY's price, and today's \"\"fundamentals.\"\" That will also save you from paying 75 for a stock worth 45, and should save you from paying 45 for a stock if it is only worth 35.\"",
"An instant 15% profit sounds good to me, so you can't go wrong selling as soon as you are able. Here are a couple other considerations: Tax implications: When you sell the stock, you have to pay taxes on the profit (including that 15% discount). The tax rate you pay is based on how long you wait to sell it. If you wait a certain amount of time (usually 2 years, but it will depend on your specific tax codes) before you sell, you could be subject to lower tax rates on that profit. See here for a more detailed description. This might only apply if you're in the US. Since you work for the company, you may be privy to a bit more information about how the company is run and how likely it is to grow. As such, if you feel like the company is headed in the right direction, you may want to hold on the the stock for a while. I am generally wary of being significantly invested in the company you work for. If the company goes south, then the stock price will obviously drop, but you'll also be at risk to be laid off. As such you're exposed much more risk than investing in other companies. This is a good argument to sell the stock and take the 15% profit.* * - I realize your question wasn't really about whether to sell the stock, but more for when, but I felt this was relevant nonetheless.",
"I agree, one should not let the tax tail wag the investing dog. The only question should be whether he'd buy the stock at today's price. If he wishes to own it long term, he keeps it. To take the loss this year, he'd have to sell soon, and can't buy it back for 30 days. If, for whatever reason, the stock comes back a bit, he's going to buy in higher. To be clear, the story changes for ETFs or mutual funds. You can buy a fund to replace one you're selling, capture the loss, and easily not run afoul of wash sale rules.",
"If your criteria has changed but some of your existing holdings don't meet your new criteria you should eventually liquidate them, because they are not part of your new strategy. However, you don't want to just liquidate them right now if they are currently performing quite well (share price currently uptrending). One way you could handle this is to place a trailing stop loss on the stocks that don't meet your current criteria and let the market take you out when the stocks have stopped up trending.",
"Right now is the perfect time to sell a business. The ideal time to sell a business is when.... The stock market is hot/high (it is) Interest rates are low (they are) Inflation rate is low (it is) Financing is abundant (it is) Market is brisk (it is) When demand is higher than supply (it is) Buyers abound (they are) Pricing is favorable (it is) The company is performing well The owner is ready",
"This is the S&P a bit over 20 years. If you've discovered a way to sell at 1400 in 2000, buy at 800 or so in 2003, sell again, well, you get the idea. There's strong evidence the typical investor hears the S&P is making new highs and rushes in. It's this influx that may send stocks higher from here, until the smart money senses 'overbought' and bails. I am not the smart money, but my ability to ignore emotion, and use asset allocation naturally had me selling a bit into each run up, and of course buying during downturns. Not all or none, and not with any perfect timing, just at year end when I'm rebalancing. I am not a fan of short term timing, although I do respect Victor's observations and excellent example of when it's been shown to work.",
"\"The response to this question will be different depending which of the investment philosophies you are using. Value investors look at the situation the company is in and try to determine what the company is worth and what it will be worth in the future. Then they look at the current stock price and decide whether or not the stock is priced at a good deal or not. If the stock price is priced lower than they believe the company is worth, they would want to buy stock, and if the price rises above what they believe to be the true value, they would sell. These types of investors are not looking at the history or trend of what the price has done in the past, only what the current price is and where they believe the price should be in the future. Technical analysis investors do something different. It is their belief that as stock prices go up and down, they generally follow patterns. By looking at a chart of what a stock price has been in the past, they try to predict where it is headed, and buy or sell based on that prediction. In general, value investors are longer-term investors, and technical analysis investors are short-term investors. The advice you are considering makes a lot of sense if you are using technical analysis. If you have a stock that is trending down, your strategy probably tells you to sell; buying more in the hopes of turning things around would be seen as a mistake. It is like the gambler in Vegas who keeps playing a game he is losing, hoping that his luck changes. However, for the value investor, the historical price of a stock, and even the amount you currently have gained or lost in the stock, are essentially ignored. All that matters is whether or not the stock price is above or below the true value determined by the investor. For him, if the stock price falls and he believes the company still has a high value, it could be a signal to buy more. The above advice doesn't really apply for them. Many investors don't follow either of these strategies. They believe that it is too difficult and risky to try to predict the future price of an individual stock. Instead, they invest in many companies all at once using index mutual funds, believing that the stock market as a whole always heads up over a long time frame. Those investors don't care at all if the prices of stock are going up or down. They simply keep investing each month, and hold until they have another use for the money. The above advice isn't useful for them at all. No matter which kind of investing you are doing, the most important thing is to pick a strategy you believe in and follow the plan without emotion. Emotions can cause investors to make mistakes and start buying when their strategy tells them to sell. Instead of trying to follow fortune cookie advice like \"\"Don't throw good money after bad,\"\" choose an investment strategy, make a plan, test it, and follow it, cautiously (after all, it may be a bad plan). For what it is worth, I am the third type of investor listed above. I don't buy individual stocks, and I don't look at the stock prices when investing more each month. Your description of your own strategy as \"\"buy and hold\"\" suggests you might prefer the same approach.\"",
"Don't throw good money after bad. If you bought on the peak of an event like news/earnings hoping for more and ignored its value than you might be doomed. Determine the stocks value and see it as a buying opportunity if it's still sweet. If not buy more carefully. Those kinds of moves in that range you must have been involved in micro-small caps like biotechs. Thats where money goes to talk to itself and chew on its arm. You win big by finding an alien chip under your skin to reverse engineer or far more likely just wind up eating yourself. If your not holding inside info or at the higher levels of a pyramid for a pump/dump you really shouldn't let your greed take you there. I can expect and stomach w/o worry being wrong at my buy time as much as 10-15% and live with it for a year or more because I see I'm buying a quarter for a dime and will continue to buy into it without staking everything though). I bought in heavy when netflix (prior to split) was $50 or so hoping for a quick bounce and it sunk to like 20 something. No I didn't buy more, I felt like I just got my own .com bubble experience. I stopped looking at it,helpless to do anything other than eat a huge loss I adopted an out of sight out of mind thinking. I no longer wished to be in it, I felt like an ass for getting myself into it, it did NOT look good at the time and I risked a huge amount of capital for what I felt wrongly was a nice quick trade to make some thousands off. Checked it one day, must have wanted to hurt myself, and it was near $300 a share. My extreme loss had turned into something wonderful. A big tax bomb. Netflix eventually split and rose even more meteorically. I held on and only exited a while back and my worst mistake became my best success. Yet still, you trade like that, on unsound things, don't rely on getting the winning ticket because they are few and all others are losers. If your in for a penny you need to be in for the pound and help yourself immensely by sticking to sound stocks and currencies. You trade on news you may find yourself in Zimbabwe dollars with Enron stock. Bad footing, no matter the news or excitement is bad footing.",
"Its like anything else, you need to study and learn more about investing in general and the stocks you are looking at buying or selling. Magazines are a good start -- also check out the books recommended in another question. If you're looking at buying a stock for the mid/long term, look at things like this: Selling is more complicated and more frequently screwed up:",
"\"If you really believe in the particular stocks, then don't worry about their daily price. Overall if the company is sound, and presumably paying a dividend, then you're in it for the long haul. Notwithstanding that, it is reasonable to look for a way out. The two you describe are quite different in their specifics. Selling sounds like the simpler of the two, but the trigger event, and if it is automatic or \"\"manual\"\" matters. If you are happy to put in a sell order at some time in the future, then just go ahead with that. Many brokers can place a STOP order, that will trigger on a certain price threshold being hit. Do note, however, that by default this would place a market order, and depending on the price that breaks through, in the event of a flash crash, depending on how fast the brokers systems were, you could find yourself selling quite cheaply. A STOP LIMIT order will place a limit order at a triggered price. This would limit your overall downside loss, but you might not sell at all if the market is really running away. Options are another reasonable way to deal with the situation, sort of like insurance. In this case you would likely buy a PUT, which would give you the right, but not the obligation to sell the stock at the price the that was specified in the option. In this case, no matter what, you are out the price of the option itself (hence my allusion to insurance), but if the event never happens then that was the price you paid to have that peace of mind. I cannot recommend a specific course of action, but hopefully that fleshed out the options you have.\"",
"I haven't seen anyone mention tax considerations and that's why I'm answering this. The rest of my answer is probably covered in the aggregate of other responses. Here's how I would look at this in a taxable (not an IRA) account: This could be an opportunity to harvest the tax losses to offset taxable gains this year or in future years. Unless I have compelling reasons to believe that the price will recover by at least (Loss% x ApplicableTaxRate) in the next 31 days then I would take the known - IRS tables - opportunities over the unknown. Here's what I would consider for all accounts: Is this the most likely place to earn a good return on my money and is it contributing to a strategy that fits my risk tolerance? You might need to get some emotional distance from the pain to make this determination objectively. As you consider your trading and investment strategy going forward consider that when it hurts and you have to pull yourself up by the bootstraps to think clearly about your situation, you were most likely trading with too much size for you in that particular position. I'm willing to make exceptions to that rule of thumb, but it's a good way to use the painful losses as a gut check on how your strategy fits your real situation. P.S. All traders experience individual losses that hurt and find their way to the most suitable strategies for them through these painful experiences.",
"\"If the stock is below its purchase price, there is no way to exit the position immediately without taking losses. Since presumably you had Good Reasons for buying that stock that haven't changed overnight, what you should probably do is just hold it and wait for the stock to come back up. Otherwise you're putting yourself into an ongoing pattern of \"\"buy high, sell low\"\", which is precisely what you don't want to do. If you actually agree with the market that you made a mistake and believe that the stock will not recover any part of the loss quickly (and indeed will continue going down), you could sell immediately and take your losses rather than waiting and possibly taking more losses. Of course if the stock DOES recover you've made the wrong bet. There are conditions under which the pros will use futures to buffer a swing. But that's essentially a side bet, and what it saves you has to be balanced against what it costs you and how certain you are that you NOW can predict the stock's motion. This whole thing is one of many reasons individuals are encouraged to work with index funds, and to buy-and-hold, rather than playing with individual stocks. It is essentially impossible to reliably \"\"time the market\"\", so all you can do is research a stock to death before making a bet on it. Much easier, and safer, to have your money riding on the market as a whole so the behavior of any one stock doesn't throw you into a panic. If you can't deal with the fact that stocks go down as well as up, you probably shouldn't be in the market.\"",
"\"If you have someplace to put the money which you think will yield significantly better returns, by all means sell and buy that. On the other hand, if you think this stock is likely to recover its value, you might want to hold it, or even buy more as a \"\"contrarian\"\" investment. Buy low, sell high, as much as possible. And diversify. You need to make a judgement call about the odds. We can point out the implications, but in the end whether to sell, buy, hold or hedge is your decision. (This also suggests you need to sit down and draw up a strategy. Agonizing over every decision is not productive. If you have a plan, you make this sort of decision before you ever put money into the stock in the first place.)\"",
"\"You should establish a strategy -- eg a specific mix of investments/funds which has the long-term tradeofv of risk, returns, and diversification you want -- and stick to that strategy, rebalancing periodically to maintain your strategic ratios betwedn those investments. Yes, that means you will somettimes sell things that have been doing well and buy others that have been doing less well -- but that's to be expected; it's exactly what happens when you \"\"buy low, sell high\"\".\"",
"One possibility is to lock in gains by selling, where a selling price can attempt to be optimized by initiating a trailing stop loss order. You'll have to look at the pros and cons of that kind of order to see if it is right for you. Another possibility is to begin hedging with options contracts, if that security is optionable. Puts with the appropriate delta will cost over time against future gains in the stock's price, but will protect your wealth if the stock price falls from this high point. These possibilities depend on what your investment goals are. For instance, if you are buying no matter what price because you like the forward guidance of the company, then it changes your capital growth and preservation decisions.",
"When you are a certain age you will be able to tap into your retirement accounts, or start receiving pension and social security funds. In addition you may be faced with required minimum distributions from these accounts. But even before you get to those points you will generally shift the focus of new funds into the retirement account to be more conservative. Depending on the balances in the various accounts and the size of the pension and social security accounts you may even move invested funds from aggressive to conservative investments. The proper proportion of the many different types of investments and revenue streams is open to much debate. During retirement you will be pulling money out of retirement accounts either to support your standard of living or to meet the required minimum distributions. What to sell will be based on either the tax implications or the required distributions that will still maintain the asset allocation you desire. If your distributions are driven by the law you will be selling enough to meet a specific required $ figure. You will either spend that money or move it into a low interest savings account or a non-retirement investment account. If trying to meet your standard of living expectations you will be selling funds that allow you to keep your desired asset allocation but still have enough to live on. Again you will be trying to meet a specific $ figure. Of course you may decide at anytime in retirement to rebalance based on changes to your lifestyle, family obligations, or winning the lottery.",
"No one can advise you on whether to hold this stock or sell it. Your carried losses can offset short or long term gains, but the long term losses have to be applied to offset long term gains before any remaining losses can offset short term gains. Your question doesn't indicate how long you have to hold before the short term gains become long term gains. Obviously the longer the holding period, the greater the risk. You also must avoid a wash sale (selling to lock in the gains/reset your basis then repurchasing within a month). All of those decisions hold risks that you have to weigh. If you see further upside in holding it longer, keep the investment. Don't sell just to try to maximize tax benefits.",
"The principle behind the advice to not throw good money after bad is better restated in economics terms: sunk costs are sunk and irrelevant to today's decisions. Money lost on a stock is sunk and should not affect our decisions today, one way or the other. Similarly, the stock going up should not affect our decisions today, one way or the other. Any advice other than this is assuming some kind of mispricing or predictability in the market. Mispricings in general cannot be reliably identified and stock returns are not normally predictable. The only valid (efficient markets) reason I know of to allow money you have lost or made on a stock to affect your decision today is the tax implications (you may want to lock in gains if your tax rate is temporarily low or vice versa).",
"As per the chart pattern when ever a stock breaks its 52 week high. This information may differ for penny stocks,small caps and mid cap stocks",
"\"If you sold the stock for a profit, you will owe tax on that profit. Whether it is taxed as short-term or long-term capital gains depends on how long you held the stock before selling it. Presumably you're going to invest this money into mutual funds or something of that sort. Those may pay dividends which can be reinvested, and will grow in value (you hope) just as the individual stock shares would (you hope). Assuming the advice you've been given is at all reasonable, there's no need for buyer's remorse here; you're just changing your investing style to a different point on the risk-versus-return curve. (If you have to ask this question, I tend to agree that you should do more homework before playing with shares in individual companieS ... unless you're getting thess shares at employee discount, in which case you should still seriously consider selling them fairly quickly and reinvesting the money in a more structured manner. In a very real sense your job is itself an \"\"investment\"\" in your employer; if they ever get into trouble you don't want that to hit both your income and investments.)\"",
"You could always maintain a limit order to sell at a price you're comfortable with.",
"\"You've laid out a strategy for deciding that the top of the market has passed and then realizing some gains before the market drops too far. Regardless of whether this strategy is good at accomplishing its goal, it cannot by itself maximize your long-term profits unless you have a similar strategy for deciding that the bottom of the market has passed. Even if you sell at the perfect time at the top of the market, you can still lose lots of money by buying at the wrong time at the bottom. People have been trying to time the market like this for centuries, and on average it doesn't work out all that much better than just plopping some money into the market each week and letting it sit there for 40 years. So the real question is: what is your investment time horizon? If you need your money a year from now, well then you shouldn't be in the stock market in the first place. But if you have to have it in the market, then your plan sounds like a good one to protect yourself from losses. If you don't need your money until 20 years from now, though, then every time you get in and out of the market you're risking sacrificing all your previous \"\"smart\"\" gains with one mistimed trade. Sure, just leaving your money in the market can be psychologically taxing (cf. 2008-2009), but I guarantee that (a) you'll eventually make it all back (cf. 2010-2014) and (b) you won't \"\"miss the top\"\" or \"\"miss the bottom\"\", since you're not doing any trading.\"",
"people implicity agree to sell stocks when a company does bad But, remember, when you sell the stock of a company that, in your estimation, 'did bad', someone else had to buy; otherwise, there is no sale. The someone else who bought your shares evidently disagrees with your assessment. Did you sell because the company didn't earn a profit at all? Did it not earn a profit because it's in a dead-end business that is slowly but inevitably declining to zero? Something like Sears Holdings? Or did it not make a profit because it is in an emerging market that will possibly someday become hugely profitable? Something like Tesla, Inc.? Did you sell because the company made a profit, but it was lower than expected? Did they make a lower-than-expected profit because of lower sales? Why were the sales lower? Is the industry declining? Was the snow too heavy to send the construction crews out? Did the company make a big investment to build a new plant that will, in a few years, yield even higher sales and profits? What are the profits year-over-year? Increasing? Declining? Usually, investors are willing to pay a premium, that is more than expected, for a stock in a company with robust growth. As you can see, the mere fact that a company reported a profit is only one of many factors that determine the price of the shares in the market.",
"\"Unless you want to own the actual shares, you should simply sell the call option.By doing so you actual collect the profits (including any remaining time-value) of your position without ever needing to own the actual shares. Please be aware that you do not need to wait until maturity of the call option to sell it. Also the longer you wait, more and more of the time value embedded in the option's price will disappear which means your \"\"profit\"\" will go down.\"",
"In the US, it is perfectly legal to execute what you've described. However, since you seem to be bullish on the stock, why sell? How do you KNOW the price will continue downwards? Aside from the philosophical reasoning, there can be significant downside to selling shares when you're expecting to repurchase them in the near future, i.e. you will lose your cost basis date which determines whether or not your trade is short-term (less than 1 year) or long-term. This cost basis term will begin anew once you repurchase the shares. IF you are trying to tax harvest and match against some short-term gains, tax loss harvesting prior to long-term treatment may be suitable. Otherwise, reexamine your reasoning and reconsider the sale at all, since you are bullish. Remember: if you could pick where stock prices are headed in the short term with any degree of certainty you are literally one of a kind on this planet ;-). In addition, do remember that in a tax deferred account (e.g. IRA) the term of your trade is typically meaningless but your philosophical reasoning for selling should still be examined.",
"\"The psychology of investing is fascinating. I buy a stock that's out of favor at $10, and sell half at a 400% profit, $50/share. Then another half at $100, figuring you don't ever lose taking a profit. Now my Apple shares are over $500, but I only have 100. The $10 purchase was risky as Apple pre-iPod wasn't a company that was guaranteed to survive. The only intelligent advice I can offer is to look at your holdings frequently, and ask, \"\"would I buy this stock today given its fundamentals and price?\"\" If you wouldn't buy it, you shouldn't hold it. (This is in contrast to the company ratings you see of buy, hold, sell. If I should hold it, but you shouldn't buy it to hold, that makes no sense to me.) Disclaimer - I am old and have decided stock picking is tough. Most of our retirement accounts are indexed to the S&P. Maybe 10% is in individual stocks. The amount my stocks lag the index is less than my friends spend going to Vegas, so I'm happy with the results. Most people would be far better off indexing than picking stocks.\"",
"> From what I hear and know you sell when you're up and buy when it's down. That *is* how profit is attained. However, if you're looking to *invest,* both buy and sell decisions should be made after extensive research and, generally, there should be some time between the two offsetting transactions. If you personally decide to *trade*, which is more often and less likely to succeed (per se), that's up to you."
] |
[
"I am a believer in stocks for the long term, I sat on the S&P right though the last crash, and am 15% below the high before the crash. For individual stocks, you need to look more closely, and often ask yourself about its valuation. The trick is to buy right and not be afraid to sell when the stock appears to be too high for the underlying fundamentals. Before the dotcom bubble I bought Motorola at $40. Sold some at $80, $100, and out at $120. Coworkers who bought in were laughing as it went to $160. But soon after, the high tech bubble burst, and my sales at $100 looked good in hindsight. The stock you are looking at - would you buy more at today's price? If not, it may be time to sell at least some of that position.",
"\"My theory is that for every stock you buy, you should have an exit strategy and follow it. It is too hard to let emotions rule if you let your default strategy be \"\"let's see what happens.\"\" and emotional investing will almost never serve you well. So before buying a stock, set a maximum loss and maximum gain that you will watch for on the stock, and when it hits that number sell. At the very least, when it hits one of your numbers, consciously make a decision that you are effectively buying it again at the current price if you decide to stay in. When you do this, set a new high and low price and repeat the above strategy.\"",
"Keep a diary, before buying write down why are you buying the stock, how long do you plan to keep it. Put down reasons when you would sell it. For example you buy a stock because it has lot of cash reserve, it is a focused company, good management. You would sell when management leaves or it starts to use its cash for acquisition that are not fitting in profile."
] |
3451
|
Should you keep your stocks if you are too late to sell?
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"Depends entirely on the stock and your perception of it. Would you buy it at the current price? If so, keep it. Would you buy something else? If so, sell it and buy that.",
"Personally, I have been in that situation too often that now I am selling at the first tick down! (not exactly but you get the idea..) I have learned over the years to not fall in love with any stock, and this is a very hard thing to do. Limit your losses and take profit when you are satisfied with them. Nothing prevents you from buying back in this stock but why buying when it is going down? Just my 2 cents.",
"Don't throw good money after bad. If you bought on the peak of an event like news/earnings hoping for more and ignored its value than you might be doomed. Determine the stocks value and see it as a buying opportunity if it's still sweet. If not buy more carefully. Those kinds of moves in that range you must have been involved in micro-small caps like biotechs. Thats where money goes to talk to itself and chew on its arm. You win big by finding an alien chip under your skin to reverse engineer or far more likely just wind up eating yourself. If your not holding inside info or at the higher levels of a pyramid for a pump/dump you really shouldn't let your greed take you there. I can expect and stomach w/o worry being wrong at my buy time as much as 10-15% and live with it for a year or more because I see I'm buying a quarter for a dime and will continue to buy into it without staking everything though). I bought in heavy when netflix (prior to split) was $50 or so hoping for a quick bounce and it sunk to like 20 something. No I didn't buy more, I felt like I just got my own .com bubble experience. I stopped looking at it,helpless to do anything other than eat a huge loss I adopted an out of sight out of mind thinking. I no longer wished to be in it, I felt like an ass for getting myself into it, it did NOT look good at the time and I risked a huge amount of capital for what I felt wrongly was a nice quick trade to make some thousands off. Checked it one day, must have wanted to hurt myself, and it was near $300 a share. My extreme loss had turned into something wonderful. A big tax bomb. Netflix eventually split and rose even more meteorically. I held on and only exited a while back and my worst mistake became my best success. Yet still, you trade like that, on unsound things, don't rely on getting the winning ticket because they are few and all others are losers. If your in for a penny you need to be in for the pound and help yourself immensely by sticking to sound stocks and currencies. You trade on news you may find yourself in Zimbabwe dollars with Enron stock. Bad footing, no matter the news or excitement is bad footing.",
"The stock price is not only based on the general market trend and the stock's current profitability and prospects, but is also based on prediction of how the stock's prospects might change in the future. In almost every case, there are professional investors analysing the stock's future prospects and considering whether it's over or under values for its current price. However even professionals can be totally wrong. If you feel like you have a good grasp on whether the stock will have improving or declining prospects over time, then you might be (if you're right) equipped to make a sensible decision on whether to hold the stock or not. If you don't think you have a good understanding about the stock, then an understanding of the general market direction might at least make stock in general worth holding. Otherwise, you are simply taking a punt. If you know of another stock that has better prospects, then ask yourself why you would hold onto the stock that you think will perform worse. But also bear in mind that (in my understanding) research has shown that, on average, people who try to pick stocks rarely do better than a random selection, and more stock trades means more brokerage (which thanks to brokerage losses would mean you will end up doing worse than average unless you really do know better than the market).",
"Hopefully, before you invested in this stock, you evaluated the company. You looked at the financial information about the company and where the company was headed, and evaluated whether the stock was undervalued or overvalued. Hopefully, you determined that the stock was undervalued at the time you bought it. The thing to do now is to reevaluate the stock. Do you think the stock is overvalued or undervalued right now? If you didn't own it, would you buy it today? Instead of looking at the past performance of the stock, you want to try to determine which direction the stock will go from today. If you wouldn't buy it today at it's current price, then you should sell. If you have no idea how to do this evaluation, neither do I. For me, with the investing knowledge I have right now, investing in an individual stock would be way too risky. If you don't know how to evaluate a stock and determine if it is a good buy or not, then you should stay away from individual stocks and instead invest in stock mutual funds, which lower the risk by diversifying over lots of stocks.",
"You bought the stock at some point in the past. You must have had a reason for this purchase. Has the recent change in price changed the reason you bought the stock? You must assume your losses are sunk costs. No matter what action you take, you can not recover your losses. Do not attempt to hold the stock in the hopes of regaining value, or sell it to stop losses. Instead approach this event as if this very day, you were given shares of the company's stock at their current market value for free as a gift. In this hypothetical situation, would you hold the shares, or sell them? Use that to judge your options. Not everyone, myself included, can handle the mental stress of watching share prices change. You can always consider trading index funds instead, which are much less volatile but will provide consistent, albeit, boring returns. This may or may not be you, but it's an option. Finally, do not keep money in the market you are not prepared to lose. It seems obvious, but if you lost 40% today, you could lose 100% tomorrow.",
"Ignore sunk costs and look to future returns. Although it feels like a loss to exit an investment from a loss position, from a financial standpoint you should ignore the purchase price. If your money could be better invested somewhere else, then move it there. You shouldn't look at it as though you'll be more financially secure because you waited longer for the stock to reach the purchase price. That's psychological, not financial. Some portion of your invested wealth is stuck in this particular stock. If it would take three months for the stock to get back to purchase price but only two months for an alternate investment to reach that same level, then obviously faster growth is better. Your goal is greater wealth, not arbitrarily returning certain investments to their purchase price. Investments are just instrumental. You want more wealth. If an investment is not performing, then ignore purchase price and sunken costs. Look at the reasonable expectations about an investment going forward.",
"\"If you're asking this question, you probably aren't ready to be buying individual stock shares, and may not be ready to be investing in the market at all. Short-term in the stock market is GAMBLING, pure and simple, and gambling against professionals at that. You can reduce your risk if you spend the amount of time and effort the pros do on it, but if you aren't ready to accept losses you shouldn't be playing and if you aren't willing to bet it all on a single throw of the dice you should diversify and accept lower potential gain in exchange for lower risk. (Standard advice: Index funds.) The way an investor, as opposed to a gambler, deals with a stock price dropping -- or surging upward, or not doing anything! -- is to say \"\"That's interesting. Given where it is NOW, do I expect it to go up or down from here, and do I think I have someplace to put the money that will do better?\"\" If you believe the stock will gain value from here, holding it may make more sense than taking your losses. Specific example: the mortgage-crisis market crash of a few years ago. People who sold because stock prices were dropping and they were scared -- or whose finances forced them to sell during the down period -- were hurt badly. Those of us who were invested for the long term and could afford to leave the money in the market -- or who were brave/contrarian enough to see it as an opportunity to buy at a better price -- came out relatively unscathed; all I have \"\"lost\"\" was two years of growth. So: You made your bet. Now you have to decide: Do you really want to \"\"buy high, sell low\"\" and take the loss as a learning experience, or do you want to wait and see whether you can sell not-so-low. If you don't know enough about the company to make a fairly rational decision on that front, you probably shouldn't have bought its stock.\"",
"If you know you have picked a bad stock, the sooner you sell the better. There is a tendency to hold a bad stock in the hope that it will pick up again. Most of us fall into this trap. The best way one needs to look at things are;",
"Stocks go down and go back up, that's their nature... Why would you sell on a low point? Stocks are a long term investment. If the company is still healthy, it's very likely you'll be able to sell them with a profit if you wait long enough.",
"\"If you have someplace to put the money which you think will yield significantly better returns, by all means sell and buy that. On the other hand, if you think this stock is likely to recover its value, you might want to hold it, or even buy more as a \"\"contrarian\"\" investment. Buy low, sell high, as much as possible. And diversify. You need to make a judgement call about the odds. We can point out the implications, but in the end whether to sell, buy, hold or hedge is your decision. (This also suggests you need to sit down and draw up a strategy. Agonizing over every decision is not productive. If you have a plan, you make this sort of decision before you ever put money into the stock in the first place.)\"",
"\"Is there anyway to salvage my investment for short-term? No. If by \"\"salvage\"\" you mean \"\"get back as much as you paid\"\", the only way to salvage it is to wait as long as you consider \"\"short-term\"\" and see if goes up again. If by \"\"salvage\"\" you mean \"\"get some money back\"\", the only thing you can do to guarantee that is sell it now. By doing so, you guarantee that you will get neither more nor less than it is worth right now. Either way, there is nothing you can do other than sell the stock or hold it. The stock price went down. You can't make it go back up. Would it be better if I sell my stocks now and buy from other company? Or should I just wait for it's price to go up again? This depends on why you bought the stock, and what you think it will do in the future. You said a family member persuaded you. Does that family member still think the stock will go up again? If so, do you still trust them? You didn't even say what stock it is in your question, so there's no way anyone here can tell you whether it's a good idea to sell it or not. Even if you do say what stock it is, all anyone can do is guess. If you want, you could look the stock up on Motley Fool or other sites to see if analysts believe it will rise. There are lots of sources of information. But all you can do with that information is decide to sell the stock or not. It may sound obvious, but you should sell if you think the stock will go lower, and hold it if you think it could still go back up. No one can tell you which of those things is going to happen.\"",
"If the stock starts to go down DO NOT SELL!! My reasoning for this is because, when you talk about the stock market, you haven't actually lost any money until you sell the stock. So if you sell it lower than you bought it, you loose money. BUT if you wait for the stock to go back up again, you will have made money.",
"It depends on what your investment goals are. Are you investing for the short-term or the long-term? What was your reason for investing in these stocks in the first place? Timing short-term fluctuations in the market is very difficult, so if that's your goal, I wouldn't count on being able to sell and buy back in at exactly the right time. Rather, I think you should think about what your investment rationale was in the first place, and whether or not that rationale still holds. If it does, then hold on to the stocks. If it doesn't, then sell.",
"Just get out. If the investment isn't going up, you are losing money to inflation, as well as the opportunity cost of not having the money somewhere more profitable. These things happen to the best of us. Just learn from it and move on. Some valuable lessons: Just keep trying. Mistakes like this are all part of the learning process. Best of luck.",
"I bought 1000 shares of a $10 stock. When it doubled, I sold half, no need to be greedy. I watched the shares split 2 for one, and sold as it doubled and doubled again. In the end, I had $50,000 in cash pulled out and still had 100 shares. The shares are now worth $84K since they split 7 for one and trade near $120. Had I just kept the shares till now, no sales, I'd have 14,000 shares of Apple worth $1.68M dollars. $130K for an initial $10,000 investment is nothing to complain about, but yes, taking a profit can be the wrong thing. 25%? Was that all the potential the company had? There's one question to ask, not where is the price today compared to last year or two years ago, but what are the company's prospects. Is the reason I bought them still valid? Look at your investment each quarter as if you were making the decision that day. I agree, diversification is important, so the choice is only hold or sell, not to buy more of a good company, because there are others out there, and the one sane thing Cramer says that everyone should adhere to is to not put your eggs in one basket.",
"What you are suggesting would be the correct strategy, if you knew exactly when the market was going to go back up. This is called market timing. Since it has been shown that no one can do this consistently, the best strategy is to just keep your money where it is. The market tends to make large jumps, especially lately. Missing just a few of these in a year can greatly impact your returns. It doesn't really matter what the market does while you hold investments. The important part is how much you bought for and how much you sold for. This assumes that the reasons that you selected those particular investments are still valid. If this is not the case, by all means sell them and pick something that does meet your needs.",
"Try to find out (online) what 'the experts' think about your stock. Normally, there are some that advise you to sell, some to hold and some to buy. Hold on to your stock when most advise you to buy, otherwise, just sell it and get it over with. A stock's estimated value depends on a lot of things, the worst of these are human emotions... People buy with the crowd and sell on panic. Not something you should want to do. The 'real' value of a stock depends on assets, cash-flow, backlog, benefits, dividends, etc. Also, their competitors, the market position they have, etc. So, once you have an estimate of how much the stock is 'worth', then you can buy or sell according to the market value. Beware of putting all your eggs in one basket. Look at what happened to Arthur Andersen, Lehman Brothers, Parmalat, Worldcom, Enron, etc.",
"\"If the stock is below its purchase price, there is no way to exit the position immediately without taking losses. Since presumably you had Good Reasons for buying that stock that haven't changed overnight, what you should probably do is just hold it and wait for the stock to come back up. Otherwise you're putting yourself into an ongoing pattern of \"\"buy high, sell low\"\", which is precisely what you don't want to do. If you actually agree with the market that you made a mistake and believe that the stock will not recover any part of the loss quickly (and indeed will continue going down), you could sell immediately and take your losses rather than waiting and possibly taking more losses. Of course if the stock DOES recover you've made the wrong bet. There are conditions under which the pros will use futures to buffer a swing. But that's essentially a side bet, and what it saves you has to be balanced against what it costs you and how certain you are that you NOW can predict the stock's motion. This whole thing is one of many reasons individuals are encouraged to work with index funds, and to buy-and-hold, rather than playing with individual stocks. It is essentially impossible to reliably \"\"time the market\"\", so all you can do is research a stock to death before making a bet on it. Much easier, and safer, to have your money riding on the market as a whole so the behavior of any one stock doesn't throw you into a panic. If you can't deal with the fact that stocks go down as well as up, you probably shouldn't be in the market.\"",
"\"If you are already invested in a particular stock, I like JoeTaxpayer's answer. Think about it as if you are re-buying the stocks you own every day you decide to keep them and don't set emotional anchor points about what you paid for them or what they might be worth tomorrow. These lead to two major logical fallacies that investor's commonly fall prey to, Loss Aversion and Sunk Cost, both of which can be bad for your portfolio in the long run. To avert these natural tendencies, I suggest having a game plan before you purchase a stock based on on your investment goals for that stock. For example a combination of one or more of the following: I'm investing for the long term and I expect this stock to appreciate and will hold it until (specific event/time) at which point I will (sell it all/sell it gradually over a fixed time period) right around the time I need the money. I'm going to bail on this stock if it falls more than X % from my purchase price. I'm going to cash out (all/half/some) of this investment if it gains more than x % from my purchase price to lock in my returns. The important thing is to arrive at a strategy before you are invested and are likely to be more emotional than rational. Otherwise, it can be very hard to sell a \"\"hot\"\" stock that has suddenly jumped in price 25% because \"\"it has momentum\"\" (gambler's fallacy). Conversely it can be hard to sell a stock when it drops by 25% because \"\"I know it will bounce back eventually\"\" (Sunk Cost/Loss Aversion Fallacy). Also, remember that there is opportunity cost from sticking with a losing investment because your brain is saying \"\"I really haven't lost money until I give up and sell it.\"\" When logically you should be thinking, \"\"If I move my money to a more promising investment I could get a better return than I am likely to on what I'm holding.\"\"\"",
"The standard answer on any long term stock is hold on during the rough times. You have not lost anything until you sell. If your concern is just that you are not certain where the stock price is headed, unless you need the money now and can not afford to hold on to the stock then I would hold it.",
"I am a believer in stocks for the long term, I sat on the S&P right though the last crash, and am 15% below the high before the crash. For individual stocks, you need to look more closely, and often ask yourself about its valuation. The trick is to buy right and not be afraid to sell when the stock appears to be too high for the underlying fundamentals. Before the dotcom bubble I bought Motorola at $40. Sold some at $80, $100, and out at $120. Coworkers who bought in were laughing as it went to $160. But soon after, the high tech bubble burst, and my sales at $100 looked good in hindsight. The stock you are looking at - would you buy more at today's price? If not, it may be time to sell at least some of that position.",
"Ask yourself a better question: Under my current investment criteria would I buy the stock at this price? If the answer to that question is yes you need to work out at what price you would now sell out of the position. Think of these as totally separate decisions from your original decisions to buy and at what price to sell. If you would buy the stock now if you didn't already hold a position then you should keep that position as if you had sold out at the price that you had originally seen as your take profit level and bought a new position at the current price without incurring the costs. If you would not buy now by those criteria then you should sell out as planned. This is essentially netting off two investing decisions. Something to think about is that the world has changed and if you knew what you know now then you would probably have set your price limit higher. To be disciplined as an investor also means reviewing current positions frequently and without any sympathy for past decisions.",
"\"You have to calculate the total value of all shares and then ask yourself \"\"Would I invest that amount of money in this stock?\"\" If the answer is yes, then only sell what you need to sell. Take the $3k loss against your income, if you have no other gains. If you would not invest that amount of cash in that stock, then sell it all right now and carry forward the excess loss every year. Note at any point you have capital gains you can offset all of them with your loss carryover (not just $3k).\"",
"No one can advise you on whether to hold this stock or sell it. Your carried losses can offset short or long term gains, but the long term losses have to be applied to offset long term gains before any remaining losses can offset short term gains. Your question doesn't indicate how long you have to hold before the short term gains become long term gains. Obviously the longer the holding period, the greater the risk. You also must avoid a wash sale (selling to lock in the gains/reset your basis then repurchasing within a month). All of those decisions hold risks that you have to weigh. If you see further upside in holding it longer, keep the investment. Don't sell just to try to maximize tax benefits.",
"In my opinion, the average investor should not be buying individual stocks. One reason why is that the average investor is not capable of reading financial statements and evaluating whether a stock is overpriced or underpriced. As such, they're often tempted to make buy/sell decisions based solely on the current value of a stock as compared to the price at which they bought it. The real reasons to buy (or sell) a stock is the expectation of future growth of the company (or continued profit and expected dividends). If you aren't able to analyze a company's financial statements and business plan, then you really aren't in a position to evaluate that company's stock price. So instead of asking whether to sell based on a recent drop in stock price, you should be investigating why the stock price is falling, and deciding whether those reasons indicate a trend that you expect to continue. If you buy and sell stocks based solely on recent trends in the stock price, you probably will end up buying stocks that have recently risen and selling stocks that have recently fallen. In that case, you are buying high and selling low, which is a recipe for poor financial outcomes.",
"I believe firmly that a bird in the hand is worth two in the bush. Cash your gains out and be happy with your profit.",
"\"Don't set mental anchor points. I am saying this as a total hypocrite, mind you, it isn't easy to follow that advice. My suggestion would be to look at each investment and ask yourself, \"\"Would I buy that at today's price?\"\", because if you wouldn't you need to sell regardless of whether you are cashing out. Effectively by staying in an investment you no longer believe in, you are giving up the opportunity cost of investing that money in something with a real chance to give you a return, or in your case whatever purpose you have in mind for the cash.\"",
"You are right about the stock and index funds, with dollar cost averaging over several years, the daily price of the security (especially a dividend paying security) will not matter* because your position will have accumulated larger over several entry points, some entries with cheaper shares and some entries with more expensive shares. In the future your position will be so large that any uptick will net you large gains on your original equity. *not matter being a reference to even extreme forms of volatility. But if you had all your equity in a poor company and tanked, never to rise again, then you would still be in a losing position even with dollar cost averaging. If your only other holdings are bonds, then you MAY want to sell those to free up capital.",
"\"The price at which a stock was purchased is a sunk cost--that is, you cannot go back in time and reverse the decision you made to purchase that stock. Another example of a sunk cost would be purchasing a non-refundable, non-transferable movie ticket. Sunk costs have the tendency to create a cognitive bias in which we feel that the amount we paid at some point in the past should have some sort of bearing on the decision we make now--the purchaser of the ticket feels he must go see the movie even if he no longer wishes too, lest the ticket \"\"go to waste\"\"... the investor hopelessly clings to a battered stock for that tiny chance that just maybe some day it will return to its former glory. This is referred to as the \"\"sunk cost fallacy\"\" and is considered to be irrational behavior by economists. Keeping this in mind, your hopes and dreams for the stock at the time you purchased it should have no bearing on the decision you make now. Similarly, whether the stock has risen or fallen in price since your purchase date should have no bearing. Instead, you must consider what you expect the stock to do from this very moment on into the future--that is, you must act at the margin. You've indicated that you are faced with two choices--sell the stock now, incur the loss, but benefit from the tax break (Option A). This benefit is quite easily quantifiable--it is your marginal tax rate multiplied by the additive inverse of the loss (assuming you have/will have other gains to offset). Let's just assume that you incurred a $1000 loss, at a marginal tax rate of 20%, which means your tax benefit for the loss is $200. The second choice--to hold the stock in hopes of it rising in price (Option B)--is a bit harder to quantify. You must assume that today is day zero, and that every cent in price the stock rises is a gain to you, and every cent in price the stock looses is a loss to you. If you believe that the stock will rise to a price that will net your more than your tax benefit from option A, then holding the stock is more favorable than selling it at a loss today. Conversely, if you believe this stock will fall even further in the future, or not rise enough to net you $200 (per the example), then Option A is preferable. Granted, there are some additional complications that play into your decision. By selling the stock today, you not only get a tax benefit from the loss, but you've also freed up the funds previously used to purchase that stock to be invested elsewhere (in hopefully a better performing asset). If you choose to stick with your current stock, then the gains you may have netted elsewhere must be considered as an opportunity cost associated with Option B. Finally, the tax benefit is essentially guaranteed (so in our example, a $200 risk free return), while sticking with the stock in Option B still comes with some risk.\"",
"\"The response to this question will be different depending which of the investment philosophies you are using. Value investors look at the situation the company is in and try to determine what the company is worth and what it will be worth in the future. Then they look at the current stock price and decide whether or not the stock is priced at a good deal or not. If the stock price is priced lower than they believe the company is worth, they would want to buy stock, and if the price rises above what they believe to be the true value, they would sell. These types of investors are not looking at the history or trend of what the price has done in the past, only what the current price is and where they believe the price should be in the future. Technical analysis investors do something different. It is their belief that as stock prices go up and down, they generally follow patterns. By looking at a chart of what a stock price has been in the past, they try to predict where it is headed, and buy or sell based on that prediction. In general, value investors are longer-term investors, and technical analysis investors are short-term investors. The advice you are considering makes a lot of sense if you are using technical analysis. If you have a stock that is trending down, your strategy probably tells you to sell; buying more in the hopes of turning things around would be seen as a mistake. It is like the gambler in Vegas who keeps playing a game he is losing, hoping that his luck changes. However, for the value investor, the historical price of a stock, and even the amount you currently have gained or lost in the stock, are essentially ignored. All that matters is whether or not the stock price is above or below the true value determined by the investor. For him, if the stock price falls and he believes the company still has a high value, it could be a signal to buy more. The above advice doesn't really apply for them. Many investors don't follow either of these strategies. They believe that it is too difficult and risky to try to predict the future price of an individual stock. Instead, they invest in many companies all at once using index mutual funds, believing that the stock market as a whole always heads up over a long time frame. Those investors don't care at all if the prices of stock are going up or down. They simply keep investing each month, and hold until they have another use for the money. The above advice isn't useful for them at all. No matter which kind of investing you are doing, the most important thing is to pick a strategy you believe in and follow the plan without emotion. Emotions can cause investors to make mistakes and start buying when their strategy tells them to sell. Instead of trying to follow fortune cookie advice like \"\"Don't throw good money after bad,\"\" choose an investment strategy, make a plan, test it, and follow it, cautiously (after all, it may be a bad plan). For what it is worth, I am the third type of investor listed above. I don't buy individual stocks, and I don't look at the stock prices when investing more each month. Your description of your own strategy as \"\"buy and hold\"\" suggests you might prefer the same approach.\"",
"The cost to you for selling is 3/8% of a years salary, this is what you won't get if you sell. Tough to calculate the what-if scenarios beyond this, since I can't quantify the risk of a price drop. Once the amount in he stock is say,10%, of a years salary, if you know a drop is coming, a sale is probably worth it, for a steep drop. My stronger focus would be on how much of your wealth is concentrated in that one stock, Enron, and all.",
"No, you shouldn't buy it. The advice here is to keep any existing holdings but not make new purchases of the stock.",
"Here's an easy test... Look at the investments in your portfolio and ask yourself whether if you had the cash value, would you buy those same investments today, because effectively that is what you are doing when you continue to hold. If the answer is no, sell and pick something else. Above all else, don't react to market swings, in most cases you are going to get it wrong and wind up losing more by making emotional decisions.",
"I haven't seen anyone mention tax considerations and that's why I'm answering this. The rest of my answer is probably covered in the aggregate of other responses. Here's how I would look at this in a taxable (not an IRA) account: This could be an opportunity to harvest the tax losses to offset taxable gains this year or in future years. Unless I have compelling reasons to believe that the price will recover by at least (Loss% x ApplicableTaxRate) in the next 31 days then I would take the known - IRS tables - opportunities over the unknown. Here's what I would consider for all accounts: Is this the most likely place to earn a good return on my money and is it contributing to a strategy that fits my risk tolerance? You might need to get some emotional distance from the pain to make this determination objectively. As you consider your trading and investment strategy going forward consider that when it hurts and you have to pull yourself up by the bootstraps to think clearly about your situation, you were most likely trading with too much size for you in that particular position. I'm willing to make exceptions to that rule of thumb, but it's a good way to use the painful losses as a gut check on how your strategy fits your real situation. P.S. All traders experience individual losses that hurt and find their way to the most suitable strategies for them through these painful experiences.",
"You should constantly look at your investment portfolio and sell based on future outlook. Don't get emotional. Selling a portfolio of stocks at once without a real reason is foolish. If you have a stock that's up, and circumstances make you think it's going to go up further, hold it. If prospects are not so good, sell it. Also, you don't have to buy or sell everything at once. If you've made money on a stock and want to realize those gains, sell blocks as it goes up. Stay diversified, monitor your portfolio every week and keep a reserve of cash to use when opportunity strikes. If you have more stocks or funds than you can keep current on every week, you should consolidate your positions over time.",
"You should be worried. You have made the mistake of entering an investment on the recommendation of family/friend. The last think you should do is make another mistake of just leaving it and hoping it will go up again. Your stock has dropped 37.6% from its high of $74.50. That means it has to go up over 60% just to reach the high of $74.50. You are correct this may never happen or if it does it could take a long, long time to get up to its previous highs. What is the company doing to turn its fortunes around? Take a look at some other examples: QAN.AX - Qantas Airways This stock reached a high of around $6 in late 2007 after a nice uptrend over a year and a half, it then dropped drastically at the start of the GFC, and has since kept falling and is now priced at just $1.15. QAN reported its first ever loss earlier this year, but its problems were evident much earlier. AAPL - Apple Inc. AAPL reach a high of just over $700 in September 2013, then dropped to around $400 and has recovered a bit to about $525 (still 25% below its highs) and looks to be at the start of another downtrend. How long will it take AAPL to get back to $700, more than 33% from its current price? TEN.AX - Ten Network Holdings Limited TEN reached a high of $4.26 in late 2004 after a nice uptrend during 2004. It then started a steep journey downwards and is still going down. It is now priced at just $0.25, a whopping 94% below its high. It will have to increase by 1600% just to reach its high of $4.26 (which I think will never happen). Can a stock come back from a drastic downtrend? Yes it can. It doesn't always happen, but a company can turn around and can reach and even surpass it previous highs. The question is how and when will this happen? How long will you keep your capital tied up in a stock that is going nowhere and has every chance of going further down? The most important thing with any investment is to protect your current capital. If you lose all your capital you cannot make any new investments until you build up more capital. That is why it is so important to have a risk management strategy and decide what is your get out point if things go against you before you get into any new investment. Have a stop loss. I would get out of your investment before you lose more capital. If you had set a stop loss at 20% off the stock's last highs, you would have gotten out at about $59.60, 28% higher than the current share price of $46.50. If you do further analysis on this company and find that it is improving its prospects and the stock price breaks up through its current ranging band, then you can always buy back in. However, do you still want to be in the stock if it breaks the range band on the downside? In this case who knows how low it can continue to go. N.B. This is my opinion, as others would have theirs, and what I would do in your current situation with this stock.",
"\"You should distinguish between the price and the value of a company: \"\"Price is what you pay, value is what you get\"\". Price is the share price you pay for one share of the company. Value is what a company is worth (based on fundamental analysis, one of the principles of value investing). I would recommend selling the stock only if the company's value has deteriorated due to fundamental changes (e.g. better products from competitors, declining market) and its value is lower than the current share price.\"",
"If you own the stock today, it doesn't matter what it traded for yesterday. If XYZ is trading for $40 and you own it, ask yourself if it's worth buying today for $40. If it isn't, you may want to consider selling it and buying something that is worth $40.",
"Have the reasons you originally purchased the stock changed? Is the company still sound? Does the company have a new competitor? Has the company changed the way they operate? If the company is the same, except for stock price, why would you change your mind on the company now? ESPECIALLY if the company has not changed, -- but only other people's PERCEPTION of the company, then your original reasons for buying it are still valid. In fact, if you are not a day-trader, then this COMPANY JUST WENT ON SALE and you should buy more. If you are a day trader, then you do care about the herd's perception of value (not true value) and you should sell. DAY TRADER = SELL BUY AND HOLD (WITH INTELLIGENT RESEARCH) = BUY MORE",
"Don't sell. Ever. Well almost. A number of studies have shown that buying equal amounts of shares randomly will beat the market long term, and certainly won't do badly. Starting from this premise then perhaps you can add a tiny bit extra with your skill... maybe, but who knows, you might suck. Point is when buying you have the wind behind you - a monkey would make money. Selling is a different matter. You have the cost of trading out and back in to something else, only to have changed from one monkey portfolio to the other. If you have skill that covers this cost then yes you should do this - but how confident are you? A few studies have been done on anonymised retail broker accounts and they show the same story. Retail investors on average lose money on their switches. Even if you believe you have a real edge on the market, you're strategy still should not just say sell when it drops out of your criteria. Your criteria are positive indicators. Lack of positive is not a negative indicator. Sell when you would happily go short the stock. That is you are really confident it is going down. Otherwise leave it.",
"I think the advice Bob is being given is good. Bob shouldn't sell his investments just because their price has gone down. Selling cheap is almost never a good idea. In fact, he should do the opposite: When his investments become cheaper, he should buy more of them, or at least hold on to them. Always remember this rule: Buy low, sell high. This might sound illogical at first, why would someone keep an investment that is losing value? Well, the truth is that Bob doesn't lose or gain any money until he sells. If he holds on to his investments, eventually their value will raise again and offset any temporary losses. But if he sells as soon as his investments go down, he makes the temporary losses permanent. If Bob expects his investments to keep going down in the future, naturally he feels tempted to sell them. But a true investor doesn't try to anticipate what the market will do. Trying to anticipate market fluctuations is speculating, not investing. Quoting Benjamin Graham: The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator's primary interest lies in anticipating and profiting from market fluctuations. The investor's primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell. Assuming that the fund in question is well-managed, I would refrain from selling it until it goes up again.",
"If your criteria has changed but some of your existing holdings don't meet your new criteria you should eventually liquidate them, because they are not part of your new strategy. However, you don't want to just liquidate them right now if they are currently performing quite well (share price currently uptrending). One way you could handle this is to place a trailing stop loss on the stocks that don't meet your current criteria and let the market take you out when the stocks have stopped up trending.",
"I had a coworker whose stock picking skills were clearly in the 1% level. I had a few hundred shares of EMC, bought at $10. When my coworker bought at $80, I quietly sold as it spiked to $100. It then crashed, as did many high tech stocks, and my friend sold his shares close to the $4 bottom advising that the company would go under. So I backed up the truck at $5, which for me, at the time, meant 1000 shares. This was one of nearly 50 trades I made over a good 10 year period. He was loud enough to hear throughout the office, and his trades, whether buy or sell, were 100% wrong. Individual stocks are very tough, as other posters have offered. That, combined with taking advice from those who probably had no business giving it. For the record, I am semi-retired. Not from stock picks, but from budgeting 20% of income to savings, and being indexed (S&P) with 90% of the funds. If there are options on your stock, you might sell calls for a few years, but that's a long term prospect. I'd sell and take my losses. Lesson learned. I hope.",
"\"The only general rule is \"\"If you would buy the stock at its current price, hold and possibly buy. If you wouldn't, sell and buy something you believe in more strongly.\"\" Note that this rule applies no matter what the stock is doing. And that it leaves out the hard work of evaluating the stock and making those decisions. If you don't know how to do that evaluation to your own satisfaction, you probably shouldn't be buying individual stocks. Which is why I stick with index funds.\"",
"This happened to me recently. What became the final offer was a cash buy-out of all of our shares rather than a conversion. The cash buy-out was higher than the company's original asking price and than the stock ever went on the market before hand. I was extremely pleased to have held on to the stock until the end. That said, it sounds like your situation is different. You can't necessarily time this sort of thing. You can just make your best decision and determine to be happy with the way it all plays out.",
"Only if you sell the stock in question, and use the proceeds to buy other stock. (You should probably never feel bad about selling your company stock, even if it goes up a lot later, because from a risk-exposure basis you are already exposed to your company's performance through your career. Unless you have a lot of other savings, you should diversify.)",
"Unfortunately I believe there is not a good answer to this because it's not a well posed problem. It sounds like you are looking for a theoretically sound criteria to decide whether to sell or hold. Such a criteria would take the form of calculating the cost of continuing to hold a stock and comparing it to the transactions cost of replacing it in your portfolio. However, your criteria for stock selection doesn't take this form. You appear to have some ad hoc rules defining whether you want the stock in your portfolio that provide no way to calculate a cost of having something in your portfolio you don't want or failing to have something you do want. Criteria for optimally rebalancing a portfolio can't really be more quantitative than the rules that define the portfolio.",
"\"Obviously a stock that's hit a high is profit waiting to be taken, be safe, take the money, Sell Sell Sell!! Ah.. but wait, they say \"\"run your winners, cut your losers\"\", so here this stock is a winner... keep on to it, Hold Hold Hold!!!!! Of course, if you're holding, then you think it's going to return even higher.... Buy Buy Buy!!!! So, hope that's clears things up for you - Sell, Hold, or maybe Buy :-) A more serious answer is not ever to worry about past performance, if its gone past a reasonable valuation then consider selling, but never care about selling out just because its reached some arbitrary share price. If you are worried about losses, you might like to set a trailing stop and sell if it drops, but if you're a LTBH type person, just keep it until you feel it is overvalued compared to its fundamentals.\"",
"\"First: do you understand why it dropped? Was it overvalued before, or is this an overreaction to some piece of news about them, or about their industry, or...? Arguably, if you can't answer that, you aren't paying enough attention to have been betting on that individual stock. Assuming you do understand why this price swing occurred -- or if you're convinced you know better than the folks who sold at that price -- do you believe the stock will recover a significant part of its value any time soon, or at least show a nice rate of growth from where it is now? If so, you might want to hold onto it, risking further losses against the chance of recovering part or all of what is -- at this moment -- only a loss on paper. Basically: if, having just seen it drop, you'd still consider buying it at the new price you should \"\"buy it from yourself\"\" and go on from here. That way at least you aren't doing exactly what you hope to avoid, buying high and selling low. Heck, if you really believe in the stock, you could see this as a buying opportunity... On the other hand, if you do not believe you would buy it now at its new price, and if you see an alternative which will grow more rapidly, you should take your losses and move your money to that other stock. Or split the difference if you aren't sure which is better but can figure out approximately how unsure you are. The question is how you move on from here, more than how you got here. What happened happened. What do you think will happen next, and how much are you willing to bet on it? On the gripping hand: This is part of how the market operates. Risk and potential reward tend to be pretty closely tied to each other. You can reduce risk by diversifying across multiple investments so no one company/sector/market can hurt you too badly --- and almost anyone sane will tell you that you should diversify -- but that means giving up some of the chance for big winnings too. You probably want to be cautious with most of your money and go for the longer odds only with a small portion that you can afford to lose on. If this is really stressing you out, you may not want to play with individual stocks. Mutual funds have some volatility too, but they're inherently diversified to a greater or lesser extent. They will rarely delight you, but they won't usually slap you this way either.\"",
"The principle behind the advice to not throw good money after bad is better restated in economics terms: sunk costs are sunk and irrelevant to today's decisions. Money lost on a stock is sunk and should not affect our decisions today, one way or the other. Similarly, the stock going up should not affect our decisions today, one way or the other. Any advice other than this is assuming some kind of mispricing or predictability in the market. Mispricings in general cannot be reliably identified and stock returns are not normally predictable. The only valid (efficient markets) reason I know of to allow money you have lost or made on a stock to affect your decision today is the tax implications (you may want to lock in gains if your tax rate is temporarily low or vice versa).",
"No, if you are trading options to profit solely off the option and not own the underlying, you should trade it away because it costs more to exercise:",
"There are 2 approaches. One of them is already mentioned by @Afforess. If the approach by @Afforess is not feasible, and you can not see yourself making an unbiased decision, close the position. By closing the position you will not get the best price. But by removing a distraction you will reduce amount of mistakes you make in the other stocks.",
"\"Which is one reason why I don't sell stock until I need to. A couple months ago, my largest index fund investment dropped pretty hard, and I just said \"\"well, I'll just wait for it to come up again.\"\"\"",
"\"I have heard that investing more money into an investment which has gone down is generally a bad idea*. \"\"Throwing good money after bad\"\" so to speak. This is over simplified statement to explain the concept. What is essentially says is; Say I hold stocks of XYZ; 100 units worth say USD 1000. This has lost me x% [say 50%]. The general tendency is to buy 100 more units in anticipation / hope that the price will go up. This is incorrect. However on case to case basis, this maybe the right decisions. On a periodic basis [or whenever you want to invest more money]; say you have USD 1000 and did not have the stock of XYZ, will you buy this at current price and outlook of the company. If the answer is Yes, hold the stock [or buy more], if the answer is no sell the stock at current market price and take the loss. The same applies when the price has appreciated. If you have USD 1000; given the current price and future outlook, will you buy the specific stock. If yes, hold the stock [or buy more], if answer is no sell the stock and book profit. Off-course I have not overlaid the various other considerations when buying stocks like diversification, risk profiles of individual stocks / segments, tax implications etc that are also essential even if you decide to buy or sell specific stock.\"",
"\"I would normally take a cautious, \"\"it depends\"\" approach to answering a question like this, but instead I'm going to give you a blunt opinionated answer based solely on what I would do: Even the crap. Get rid of them and get into the boring low fee mutual funds. I was in a similar situation a few years ago, almost. My retirement accounts were already in funds but my brokerage account was all individual stocks. I decided I didn't really know what I was doing despite being up by 30+% (I recognize that it was mostly due to the market itself being up, I was lucky basically). The way I cashed out was not to sell all at once. I just set up trailing stops on all of them and waited until they hit the stops. The basic idea was that if the market kept going up, the point at which they got sold also went up (it was like a 10% trail I think), and once things started to turn for that stock, they would sell automatically. Sure I sold some at very temporary dips so I missed out on some gains but that's always a risk with a trailing stop and I really didn't care at that point. If I had to do it again, I might forget all that and just sell all at once. But I feel a lot better not being in individual stocks.\"",
"None of your options or strategies are ideal. Have you considered looking at the stock chart and making a decision? Is the price currently up-trending, or is it down-trending, or is it going sideways? As Knuckle Dragger mentions, you could just set a limit price order and if it does not hit by Friday you can just sell at whatever price on Friday. However, this could be very damaging if the price is currently down-trending. It may fall considerably by Friday. I think a better strategy would be to place a trailing stop loss order, say 5% from the current price. If the stock starts heading south you will be stopped out approximately 5% below the current price. However, if the price goes up, your trailing stop order will move up as well, always trailing 5% below the highest price reached. If the trailing stop has not been hit by Friday afternoon, you can sell at the current price. This way you will be protected on the downside (only approx. 5% below current price) and can potentially benefit from any short term upside.",
"\"Some stocks do fall to zero. I don't have statistics handy, but I'd guess that a majority of all the companies ever started are now bankrupt and worth zero. Even if a company does not go bankrupt, there is no guarantee that it's value will increase forever, even in a general, overall sense. You might buy a stock when it is at or near its peak, and then it loses value and never regains it. Even if a stock will go back up, you can't know for certain that it will. Suppose you bought a stock for $10 and it's now at $5. If you sell, you lose half your money. But if you hold on, it MIGHT go back up and you make a profit. Or it might continue going down and you lose even more, perhaps your entire investment. A rational person might decide to sell now and cut his losses. Of course, I'm sure many investors have had the experience of selling a stock at a loss, and then seeing the price skyrocket. But there have also been plenty of investors who decided to hold on, only to lose more money. (Just a couple of weeks ago a stock I bought for $1.50 was selling for $14. I could have sold for like 900% profit. Instead I decided to hold on and see if it went yet higher. It's now at $2.50. Fortunately I only invested something like $800. If it goes to zero it will be annoying but not ruin me.) On a bigger scale, if you invest in a variety of stocks and hold on to them for a long period of time, the chance that you will lose money is small. The stock market as a whole has consistently gone up in the long term. But the chance is not zero. And a key phrase is \"\"in the long term\"\". If you need the money today, the fact that the market will probably go back up within a few months or a year or so may not help.\"",
"\"I primarily intend to add on to WBT's answer, which is good. It has been shown that \"\"momentum\"\" is a very real, tangible factor in stock returns. Stocks that have done well tend to keep doing well; stocks that are doing poorly tend to keep doing poorly. For a long-term value investor, of course fundamental valuation should be your first thing to look at - but as long as you're comfortable with the company's price as compared to its value, you should absolutely hang onto it if it's been going up. The old saying on Wall Street is \"\"Cut your losses, and let your winners ride.\"\" As WBT said, there may be some tangible emotional benefit to marking your win while you're ahead and not risking that it tanks, but I'd say the odds are in your favor. If an undervalued company starts rising in stock price, maybe that means the market is starting to recognize it for the deal it is. Hang onto it and enjoy the fruits of your research.\"",
"\"You probably bought the stock near the peak because \"\"it's been up a lot lately.\"\" That's the easiest way to lose money. You need to go back and do some basic research. The stock appears to have been expensive around 75. Why is that? The stock seems to be in a \"\"comfortable\"\" level around 45. Why is THAT? Maybe it's too expensive around 45 (based on the P/E ratio, or other measures); maybe you should buy more at 45, where it is cheap, even though 75 is too expensive. The key is to study the stock where it is today (45-47). Ask yourself what you would do at TODAY's price, and today's \"\"fundamentals.\"\" That will also save you from paying 75 for a stock worth 45, and should save you from paying 45 for a stock if it is only worth 35.\"",
"Some financial planners would not advise one way or the other on a specific stock without knowing your investment strategy... if you didn't have one, their goal would be to help you develop one and introduce you to a portfolio management framework like Asset Allocation. Is a two of clubs a good card? Well, that all depends on what is in your hand (diversification) and what game you are playing(investing strategy). One possibility to reduce your basis over time if you would like to hold the stock is to sell calls against it, known as a 'covered-call'. It can be an intermediate-term (30-60+ months depending on option pricing) trading strategy that may require you to upgrade your brokerage account to allow option trades. Personally I like this strategy because it makes me feel proactive about my portfolio rather than sitting on the side lines and watching stocks move.",
"If the stock has dropped from $10 to $2 and now is range trading between $2 and $3, and you were not able to sell your shares earlier, then I would no be holding on to them now. As soon as the price hit $3 sell them. After you have sold them and you noticed the stock still range trading one strategy you could apply is to go long after the price bounces off the $2 support placing a stop just below $2, then as the price moves up you trail your stop up with the price. As it starts getting close to $3 tighten your stop. If it keeps range trading and bounces off the resistance at $3 and you get stopped out, you can either go short and reverse the process or wait for it to bounce off the support at $2 again. One word of warning though, the longer a stock range trades, the bigger the outbreak out of the rage (either up or down) will be, that is the reason why you should first wait for confirmation that the price has bounced off support/resistance before opening a position, and secondly why you should use a stop loss to get you out instead of just selling when it hits $3, because if it breaks through $3 you can continue profiting as it moves up.",
"Buy and hold doesn't have an exact definition, as far as I know. In my opinion, it's offered as a contrast to those who trade too frequently, or panic every time the market drops 2%. For the general market, e.g. your S&P index holdings. You sell to rebalance to your desired asset allocation. As a personal example, at 50, I was full up invested, 95%+ in stocks. When my wife and I were retired (i.e. let go from company, but with no need to go back to work) I started shifting to get to a more sane allocation, 80/20. The ideal mix may be closer to 60/40. Also, there are times the market as a whole is overvalued as measure by P/E and/or CAPE, made popular by Nobel Prize winning Robert Shiller. During these times, an allocation shift might make sense. For the individual stocks, you had best have a strategy when you buy. Why did you buy XYZ? Because they had promise, decent company with a good outlook for their product? Now that they are up 300%, can they keep gaining share or expand their market? Sometimes you can keep raising the bar, and keep a company long term, really long. Other times, the reason you bought no longer applies, they are at or above the valuation you hoped to achieve. Note - I noticed from another question, the OP is in the UK. I answer this my from US centric view, but it should still apply to OP in general. The question was not tagged UK when I replied.",
"The market maker will always take it off your hands. Just enter a market sell order. It will cost you a commission to pull the loss into this year. But that's it.",
"One of things I've learned about trading on the stock market is not to let your emotions get to you. Greed and fear are among them. You may be overthinking. Why not keep it simple, if you think it can go up to $300 a share, put in a stop loss at $X amount where you would secure your invested money along with some gains. If it goes up, let it go up, if it doesn't well you got an exit. Then if it goes up change your stop loss amount higher if you are feeling more optimistic about the stock. And by the way, a disciplined investor would stick to their strategy but also have the smarts to rethink it on the fly such as in a situation like you are in. Just in my opinion anyway, but congrats on the gain! Some gains are better than none.",
"You sell when you think the stock is over valued, or you need the money, or you are going to need the money in the next 5 years. I buy and hold a lot. I bought IBM in 8th grade 1980. I still own it. I bought 3 share it from $190 and its now worth $5,000 do to dividend reinvestment and splits. That stock did nothing for a thirteen years except pay a dividend but then it went up by 1800% the next 20 and paid dividends. So I agree with other posters the whole pigs get slaughtered thing is silly and just makes fund managers more money. Think if you bought aapl at $8 and sold at $12. The thing went to 600 and split 7-1 and is back to $120. My parents made a ton holding Grainger for years and I have had good success with MMM and MSFT owning those for decades.",
"I agree, one should not let the tax tail wag the investing dog. The only question should be whether he'd buy the stock at today's price. If he wishes to own it long term, he keeps it. To take the loss this year, he'd have to sell soon, and can't buy it back for 30 days. If, for whatever reason, the stock comes back a bit, he's going to buy in higher. To be clear, the story changes for ETFs or mutual funds. You can buy a fund to replace one you're selling, capture the loss, and easily not run afoul of wash sale rules.",
"For the same reason you wanted it when you bought it. No-one guarantees that you'll be able to sell the stock you hold, and in fact many people get stuck with stocks they'd like to sell, but no-one is buying. But if investors think there's a profit potential that is not exhausted yet - they'll want to buy the stock.",
"\"If you buy a call, that's because you expect that the stock will go up. If it does not go up, then forget about buying more calls as your initial idea seems to be wrong. And I don't think that buying a put to make up for the loss will work either, the only thing that is sure is that you will pay another premium (on a stock that could stay where it is). Even if you are 100% sure that the stock will go up again, don't do anything, as John Maynard Keynes stated: \"\"Markets can remain irrational longer than you can remain solvent\"\". My idea is: wait until the expiration date. The good things about options is that you won't lose more than the premium that you paid for it and that until it reaches its maturity you can still make money if the market turns around. More generally, when you are purely speculating, adding to a position when it goes against you is called \"\"averaging down\"\". I sincerely discourage you to do that : If the stocks goes in the wrong direction, that means that your initial idea was wrong in the first place (or you were not right at the right moment). In my opinion, adding up to a wrong idea is not the right thing to do. When you are losing, just take your loss and don't add up to your position based on your emotions. On the other hand, adding to your position more when the stock goes in your direction is called \"\"pyramiding\"\" and is, in my opinion, a better way of doing things (you bought, you were right, let's buy more). But at some point you will have to take your profits. There are plenty of other stocks on which you can try to invest and the market will still be here tomorrow, there will be other opportunities to make profits. Rushing things by constantly trying to have a position is not a good idea. Not doing anything is also a strategy.\"",
"You should sell all your stock immediately and reinvest the money in index funds. As of right now you're competing against prop trading shops, multinational banks, and the like, who probably know a teensy bit more about that particular stock than you do. I'm sorry, any other advice is missing the point that you shouldn't be picking stocks in the first place.",
"\"Am I being absurd? No. Should I be worrying? Yes. If I sell in the morning, I've only lost a couple hundred dollars, and learned a valuable lesson. Is there any reason to believe it won't be that simple? If you're lucky, you'll be able to dump your stocks to someone like you who'll be punching himself in the face tomorrow night. If not - you're stuck. You may end up selling them to your broker as worthless. You might have become a victim of a \"\"pump and dump\"\" fraud. Those are hard to identify in real-time, but after been burned like that myself (for much lesser amounts than you though), I avoid any \"\"penny\"\" stocks that go up for no apparent (and verifiable) reason. In fact, I avoid them altogether.\"",
"What might make more sense is to 'capture' your losses. Sell out the funds you have, move into something else that is different enough that the IRS won't consider it a wash sale, and you can then use those losses to offset gains (you can even carry them forward) You would still be in the market, just having made a sort of 'sideways move'. A month or two later (once you are clear of wash sale rules) you could shift back to your original choices. (this answer presumes you are in the US, or somewhere that lets you use losses to offset gains)",
"You could always maintain a limit order to sell at a price you're comfortable with.",
"\"There are two things going on here, neither of which favors this approach. First, as @JohnFx noted, you should be wary of the sunk-cost fallacy, or throwing good money after bad. You already lost the money you lost, and there's no point in trying to \"\"win it back\"\" as opposed to just investing the money you still have as wisely as possible, forgetting your former fortune. Furthermore, the specific strategy you suggest is not a good one. The problem is that you're assuming that, whenever the stock hits $2, it will eventually rebound to $3. While that may often happen, it's far from guaranteed. More specifically, assuming the efficient market hypothesis applies (which it almost certainly does), there are theorems that say you can't increase your expected earning with a strategy like the one you propose: the apparent stability of the steady stream of income is offset by the chance that you lose out if the stock does something you didn't anticipate.\"",
"What's your basis? If you have just made a 50% gain, maybe you should cash out a portion and hold the rest. Don't be greedy, but don't pass up an opportunity either.",
"\"Though it seems unintuitive, you should rationally ignore the past performance of this stock (including the fact that it's at its 52-week high) and focus exclusively on factors that you believe should affect it moving forward. If you think it's going to go up even further, more than the return on your other options for where to put the money, keep the stock. If you think it's peaked and will be going down, now's a good time to sell. To put it another way: if you didn't already have this stock, would you buy it today? Your choice is just about the same: you can choose between a sum of cash equal to the present market value of the shares, OR the shares. Which do you think is worth more? You also mentioned that you only have 10 stocks in the portfolio. Some are probably a larger percentage than others, and this distribution may be different than what you want in your portfolio. It may be time to do some rebalancing, which could involve selling some shares where your position is too large (as a % of your portfolio) and using the proceeds toward one or more categories you're not as invested in as you would like to be. This might be a good opportunity to increase the diversity in your portfolio. If part of your reward and motivation for trading is emotional, not purely financial, you could sell now, mark it as a \"\"win,\"\" and move on to another opportunity. Trading based on emotions is not likely to optimize your future balance, but not everybody is into trading or money for money's sake. What's going to help you sleep better at night and help boost your quality of life? If holding the stock will make you stress and regret a missed opportunity if it goes down, and selling it will make you feel happy and confident even if it still goes up more (e.g. you interpret that as further confirming that you made a good pick in the first place), you might decide that the risk of suboptimal financial returns (from emotion-based trading) is acceptable. As CQM points out, you could also set a trailing sell order to activate only when the stock is a certain percentage or dollar amount below whatever it peaks at between the time you set the order and the time it fires/expires; the activation price will rise with the stock and hold as it falls.\"",
"While my margin is not nearly as good as yours, I sell out early. I generally think it's a bad idea to hold any single stock, as they can vary wildly in value. However, as you mention, it's advantageous to hold for one year. Read more about Capital Gains Taxes here and here.",
"If you feel comfortable taking an 8% gain on your stocks, then yes, you should sell. It is generally a good idea to know when you want to sell (either a price or %) before you ever actually buy the stocks. That helps from getting emotional and making poor decisions.",
"Obviously, you should not buy stock when the option is to pay down your debt. However, your question is different. Should you sell to reduce debt. That really depends on your personal situation. If you were planning to sell the stock anyway, go ahead and reduce your loans. Check out how the stock is doing and what the perspectives are. If the stock looks like it's going down, sell... Do you have savings? Unless you do, I should advise to sell the stock at any rate. If you do have savings, are they earning you more (in percentage) than your loans? If they are, keep them...",
"Simply if your stock is still rising in price keep it. If it is falling in price sell it and pay off your mortgage. To know when to do this is very easy. If it is currently rising you can put a trailing stop loss on it and sell it when it drops and hits your stop loss. A second easy method is to draw an uptrend line under the increasing price and then sell when the price drops down below the uptrend line, as per the chart below. This will enable you to capture the bulk of the price movement upward and sell before the price drops too far down. You can then use the profits (after tax) to pay down your mortgage. Of course if the price is currently in a downtrend sell it ASAP.",
"\"You can do several things: After the fact: If you believe the stock will go up, you can buy more stock now, it's what's called \"\"averaging\"\". So, you bought 100 at $10, now it's at $7. To gain money from your original investment it needs to raise to over $10. But if you really think it'll go up, you can buy and average. So you buy, say, 100 more stock at $7, now you have 200 shares at $8.50 average so you gain money on your investment when the stock goes over $8.50 instead of $10. Of course, you risk losing even more money if the stock keeps going down. Before the fact: When you buy stock, set 'triggers'. In most trading houses you can set automatic triggers to fire on conditions you set. When you buy 100 shares at $10, you can set a trigger to automatically sell the 100 shares if it drops below $9, so you limit your losses to 10% (for example).\"",
"This is a very personal situation of course, but if you can afford the repayments then I recommend keeping the house!. A house is a long term investment and one has to live somewhere. You probably didn't buy the house planning to sell it in 5 years so while in the short term you could suffer a loss on paper chances are things will pick up, they have to eventually. For each boom there is a bust, one for one.",
"When there are no buyers, you can't sell your shares, and you'll be stuck with them until there is some interest from other investors. In this link describes clearly: http://www.investopedia.com/ask/answers/03/053003.asp",
"\"My theory is that for every stock you buy, you should have an exit strategy and follow it. It is too hard to let emotions rule if you let your default strategy be \"\"let's see what happens.\"\" and emotional investing will almost never serve you well. So before buying a stock, set a maximum loss and maximum gain that you will watch for on the stock, and when it hits that number sell. At the very least, when it hits one of your numbers, consciously make a decision that you are effectively buying it again at the current price if you decide to stay in. When you do this, set a new high and low price and repeat the above strategy.\"",
"\"This is basically martingale, which there is a lot of research on. Basically in bets that have positive expected value such as inflation hedged assets this works better over the long term, than bets that have negative expected value such as table games at casinos. But remember, whatever your analysis is: The market can stay irrational longer than you can stay solvent. Things that can disrupt your solvency are things such as options expiration, limitations of a company's ability to stay afloat, limitations in a company's ability to stay listed on an exchange, limitations on your borrowings and interest payments, a finite amount of capital you can ever acquire (which means there is a limited amount of times you can double down). Best to get out of the losers and free up capital for the winners. If your \"\"trade\"\" turned into an \"\"investment\"\", ditch it. Don't get married to positions.\"",
"\"The psychology of investing is fascinating. I buy a stock that's out of favor at $10, and sell half at a 400% profit, $50/share. Then another half at $100, figuring you don't ever lose taking a profit. Now my Apple shares are over $500, but I only have 100. The $10 purchase was risky as Apple pre-iPod wasn't a company that was guaranteed to survive. The only intelligent advice I can offer is to look at your holdings frequently, and ask, \"\"would I buy this stock today given its fundamentals and price?\"\" If you wouldn't buy it, you shouldn't hold it. (This is in contrast to the company ratings you see of buy, hold, sell. If I should hold it, but you shouldn't buy it to hold, that makes no sense to me.) Disclaimer - I am old and have decided stock picking is tough. Most of our retirement accounts are indexed to the S&P. Maybe 10% is in individual stocks. The amount my stocks lag the index is less than my friends spend going to Vegas, so I'm happy with the results. Most people would be far better off indexing than picking stocks.\"",
"\"If you sold the stock for a profit, you will owe tax on that profit. Whether it is taxed as short-term or long-term capital gains depends on how long you held the stock before selling it. Presumably you're going to invest this money into mutual funds or something of that sort. Those may pay dividends which can be reinvested, and will grow in value (you hope) just as the individual stock shares would (you hope). Assuming the advice you've been given is at all reasonable, there's no need for buyer's remorse here; you're just changing your investing style to a different point on the risk-versus-return curve. (If you have to ask this question, I tend to agree that you should do more homework before playing with shares in individual companieS ... unless you're getting thess shares at employee discount, in which case you should still seriously consider selling them fairly quickly and reinvesting the money in a more structured manner. In a very real sense your job is itself an \"\"investment\"\" in your employer; if they ever get into trouble you don't want that to hit both your income and investments.)\"",
"Keep a diary, before buying write down why are you buying the stock, how long do you plan to keep it. Put down reasons when you would sell it. For example you buy a stock because it has lot of cash reserve, it is a focused company, good management. You would sell when management leaves or it starts to use its cash for acquisition that are not fitting in profile.",
"\"A key principle of economics is: Sunk costs are irrelevant. You bought the stock at 147 and it has now fallen to 144. That's too bad. This has nothing to do with whether it is wise or foolish to buy shares at 144. The only relevant thing to consider is: Do I expect the stock to go up or down from 144? You have lost $3 per share on the original buy. Buying more shares will not \"\"reduce your loss\"\" in any way. Suppose you bought 100 shares at 147. The price then drops to 144. You have lost $3 per share, or $300 total. You buy another 50 more shares at 144. The price stays at 144. So your average purchase price is now (147 x 100 + 144 x 50) / 150 = 146. So I guess you could say that your \"\"average loss per share\"\" is now only $2. But it's $2 x 150 shares instead of $3 x 100 shares. You still lost $300. You didn't reduce your loss by a penny. Maybe it made you feel better that you reduced your average loss per share, but this is just an arithmetic game. If you believe that the stock will continue to drop, than buying more shares just means you will lose even more money. Your average loss per share may go down, but you're just multiplying that average by more and more shares. Of course if you believe that the stock is now at an unjustifiably low price and it will likely go back up, then sure, buy. If you buy at 144 and it goes back up to 147, then you'll be making $3 per share on the new shares you purchased. But I repeat, whether or not you buy more shares should have nothing to do with your previous buy. Buy more shares if you think the price will go up from the present price; don't buy more shares if you don't think it will go up. The decision should be exactly the same as if you had never previously bought shares. (I'm assuming here that you are a typical small investor, that you not buying enough shares to have any significant effect on the market, nor that you are in a position to buy enough shares to take control of the company.)\"",
"\"In my view, it's better to sell when there's a reason to sell, rather than to cap your gains at 8%. I'm assuming you have no such criteria on the other side - i.e. hold your losses down to 8%. That's because what matters is how much you make overall in your portfolio, not how much you make per trade. Example: if you own three stocks, equal amounts - and two go up 20% but one falls 20%. If you sell your gains at 8%, and hold the loser, you have net LOST money. So when do you actually sell? You might say a \"\"fall of 10%\"\" from the last high is good enough to sell. This is called a \"\"trailing\"\" stop, which means if a stock goes from 100 to 120, I'll still hold and sell if it retraces to 108. Needless to say if it had gone from 100 to 90, I would still be out. The idea is to ride the trend for as long as you can, because trends are strong. And keep your trailing stops wide enough for it to absorb natural jiggles, because you may get stopped out of a stock that falls 4% but eventually goes up 200%. Or sell under other conditions: if the earnings show a distinct drop, or the sector falls out of favor. Whenever you decide to sell, also consider what it would take for you to buy the stock back - increased earnings, strong prices, a product release, whatever. Because getting out might seem like a good thing, but it's just as important to not think of it as saying a stock is crappy - it might just be that you had enough of one ride. That doesn't mean you can't come back for another one.\"",
"Like @chirs, I'm of the opinion that you might want to buy more. I've done this a couple of times, price dropped a bunch, and I said, heck, I bought some last week, and this week I can get twice as much stock for about the same price. Brought down my average cost per share, and when the company was taken private, I actually didn't lose money - unlike some other people I know, who only bought at one price, watched the drop, and held on awaiting a recovery (which didn't happen in time before the big money swooped in on it). But to do this, you need to keep cash reserves (that, like @afforess says, you can afford to lose all of) on hand, awaiting buying opportunities. This, too, is a cost - an opportunity cost.",
"\"Remind yourself that markets recover, usually within a few years. If you believe this and can remind yourself of this, you will be able to see the down cycles of the market as an opportunity to buy stock \"\"on sale\"\". No one knows the future, so many people have found investing on a regular schedule to be helpful. By putting in the same amount of money each period, you will end up buying fewer shares when the market is up, and more when it is down. As long as your time horizon is appropriate, you should be able to wait out the ups and downs. Stocks are volatile by their very nature, so if you find that you are very concerned by this, you might want to consider whether you should adjust the amount of risk in your investments, since over time, most people lose money by trying to \"\"time\"\" the market. However, if your investment goals and requirements haven't changed, there likely isn't any need to change the types of assets you are investing in, as what you are choosing to invest in should depend on your personal situation. Edit: I am assuming you want to be a long-term investor and owner, making money by owning a portion of companies' profits, and not by trading stocks and/or speculation.\"",
"\"From some of your previous questions it seems like you trade quite often, so I am assuming you are not a \"\"Buy and Hold\"\" person. If that is the case, then have you got a written Trading Plan? Considering you don't know what to do after a 40% drop, I assume the answer to this is that you don't have a Trading Plan. Before you enter any trade you should have your exit point for that trade pre-determined, and this should be included in your Trading Plan. You should also include how you pick the shares you buy, do you use fundamental analysis, technical analysis, a combination of the two, a dart board or some kind of advisory service? Then finally and most importantly you should have your position sizing and risk management incorporated into your Plan. If you are doing all this, and had automatic stop loss orders placed when you entered your buy orders, then you would have been out of the stock well before your loss got to 40%. If you are looking to hang on and hoping for the stock to recover, remember with a 40% drop, the stock will now need to rise by 67% just for you to break even on the trade. Even if the stock did recover, how long would it take? There is the potential for opportunity loss waiting for this stock to recover, and that might take years. If the stock has fallen by 40% in a short time it is most likely that it will continue to fall in the short term, and if it falls to 50%, then the recovery would need to be 100% just for you to break even. Leave your emotions out of your trading as much as possible, have a written Trading Plan which incorporates your risk management. A good book to read on the psychology of the markets, position sizing and risk management is \"\"Trade your way to Financial Freedom\"\" by Van Tharp (I actually went to see him talk tonight in Sydney, all the way over from the USA).\"",
"Sell half. If it's as volatile as you say, sell it all and buy on another dip. No one can really offer targeted advice based on the amount of information you have provided.",
"\"One alternative strategy you may want to consider is writing covered calls on the stock you have \"\"just sitting there\"\". This will allow you to earn a return (the premium from the calls) without necessarily having to give up your holding. As a brief overview, \"\"options\"\" are derivatives that give the holder the right (or option) to buy or sell shares at a specified price. Holders of call options with a strike prike $x on a particular security have the right to purchase that security at the strike price $x. Conversely, holders of put options with a strike price of $x have the right to sell that security at the strike price $x. Always on the other side of a call or put option is a person that has sold the option, which is called \"\"writing\"\" the option. If this person writes a call option, then he will be obligated to sell a certain amount of stock (100 shares per contract) at the strike price if that option is exercised. A writer of a put option will be obligated to by 100 shares per contract at the strike price if that option is exercised. Covered calls involve writing call contracts on stock that you own. For example, say you own 100 shares of AAPL, and that AAPL is currently trading for $330. You decide to write a Jan 21, 2012 call on these shares at a strike price of $340, earning you a premium of say $300. Two things can now happen: if the price of AAPL is not at least $340 on January 21, then the options are \"\"out of the money\"\" and will expire unexercised (why exercise an option to buy at $340 when you can buy at the currently cheaper market price?). You keep your AAPL stock plus the $300 premium you earn. If, however, the price of AAPL is greater than $340, the option will be exercised and you will now be required to sell the shares you own at $340. You will earn a return of $10/share ($340-$330), plus the $300 premium from the call option. You still make out in the end, but have unfortunately incurred an opportunity cost, as had you not written the call option you would have been able to sell at the market price, which is higher than the $340 strike price. Covered calls are considered relatively safe and conservative, however the strategy is most effective for stocks that are expected to stay within a relatively narrow price range for the duration of the contract. They do provide one option of earning additional money on stocks you are currently holding, albeit at the risk of giving up some returns if the stock price rises above the strike price.\"",
"\"Unless you want to own the actual shares, you should simply sell the call option.By doing so you actual collect the profits (including any remaining time-value) of your position without ever needing to own the actual shares. Please be aware that you do not need to wait until maturity of the call option to sell it. Also the longer you wait, more and more of the time value embedded in the option's price will disappear which means your \"\"profit\"\" will go down.\"",
"Don't sit on it, because the money does not work for you. Add more money to it and buy a stock or stocks of the company.",
"Your question reminds me of a Will Rogers quote: buy some good stock, and hold it till it goes up, then sell it. If it don’t go up, don’t buy it. There's no way to prevent yourself from buying a stock that goes down. In fact all stocks go down at some times. The way to protect your long term investment is to diversify, which increases the chances that you have more stocks that go up than go down. So many advisors will encourage index funds, which have a low cost (which eats away at returns) and low rick (because of diversification). If you want to experiment with your criteria that's great, and I wish you luck, but Note that historically, very few managed funds (meaning funds that actively buy and sell stocks based on some set of criteria) outperform the market over long periods. So don't be afraid of some of your stocks losing - if you diversify enough, then statistically you should have more winners than losers. It's like playing blackjack. The goal is not to win every hand. The goal is to have more winning hands than losing hands.",
"\"When the strike price ($25 in this case) is in-the-money, even by $0.01, your shares will be sold the day after expiration if you take no action. If you want to let your shares go,. allow assignment rather than close the short position and sell the long position...it will be cheaper that way. If you want to keep your shares you must buy back the option prior to 4Pm EST on expiration Friday. First ask yourself why you want to keep the shares. Is it to write another option? Is it to hold for a longer term strategy? Assuming this is a covered call writing account, you should consider \"\"rolling\"\" the option. This involves buying back the near-term option and selling the later date option of a similar or higher strike. Make sure to check to see if there is an upcoming earnings report in the latter month because you may want to avoid writing a call in that situation. I never write a call when there's an upcoming ER prior to expiration. Good luck. Alan\"",
"\"If by \"\"Company Stock\"\" you mean \"\"stock in the company I work for\"\" then absolutely sell your stock. It is too big a risk to have your investments tied into the same company that is also providing your salary. If you mean stock as in general investments, I like to look at it this way. If you have $25,000 stock and a $100,000 mortgage you ask this question: If I had a $75,000 mortgage would I borrow an additional $25,000 against my house to invest in the stock market? If the answer is yes, then you are taking a risk consistent with your tolerance for risk. If you answer no, then your tolerance for risk says you'd be happier paying down your mortgage.\""
] |
[
"In my opinion, the average investor should not be buying individual stocks. One reason why is that the average investor is not capable of reading financial statements and evaluating whether a stock is overpriced or underpriced. As such, they're often tempted to make buy/sell decisions based solely on the current value of a stock as compared to the price at which they bought it. The real reasons to buy (or sell) a stock is the expectation of future growth of the company (or continued profit and expected dividends). If you aren't able to analyze a company's financial statements and business plan, then you really aren't in a position to evaluate that company's stock price. So instead of asking whether to sell based on a recent drop in stock price, you should be investigating why the stock price is falling, and deciding whether those reasons indicate a trend that you expect to continue. If you buy and sell stocks based solely on recent trends in the stock price, you probably will end up buying stocks that have recently risen and selling stocks that have recently fallen. In that case, you are buying high and selling low, which is a recipe for poor financial outcomes.",
"\"The price at which a stock was purchased is a sunk cost--that is, you cannot go back in time and reverse the decision you made to purchase that stock. Another example of a sunk cost would be purchasing a non-refundable, non-transferable movie ticket. Sunk costs have the tendency to create a cognitive bias in which we feel that the amount we paid at some point in the past should have some sort of bearing on the decision we make now--the purchaser of the ticket feels he must go see the movie even if he no longer wishes too, lest the ticket \"\"go to waste\"\"... the investor hopelessly clings to a battered stock for that tiny chance that just maybe some day it will return to its former glory. This is referred to as the \"\"sunk cost fallacy\"\" and is considered to be irrational behavior by economists. Keeping this in mind, your hopes and dreams for the stock at the time you purchased it should have no bearing on the decision you make now. Similarly, whether the stock has risen or fallen in price since your purchase date should have no bearing. Instead, you must consider what you expect the stock to do from this very moment on into the future--that is, you must act at the margin. You've indicated that you are faced with two choices--sell the stock now, incur the loss, but benefit from the tax break (Option A). This benefit is quite easily quantifiable--it is your marginal tax rate multiplied by the additive inverse of the loss (assuming you have/will have other gains to offset). Let's just assume that you incurred a $1000 loss, at a marginal tax rate of 20%, which means your tax benefit for the loss is $200. The second choice--to hold the stock in hopes of it rising in price (Option B)--is a bit harder to quantify. You must assume that today is day zero, and that every cent in price the stock rises is a gain to you, and every cent in price the stock looses is a loss to you. If you believe that the stock will rise to a price that will net your more than your tax benefit from option A, then holding the stock is more favorable than selling it at a loss today. Conversely, if you believe this stock will fall even further in the future, or not rise enough to net you $200 (per the example), then Option A is preferable. Granted, there are some additional complications that play into your decision. By selling the stock today, you not only get a tax benefit from the loss, but you've also freed up the funds previously used to purchase that stock to be invested elsewhere (in hopefully a better performing asset). If you choose to stick with your current stock, then the gains you may have netted elsewhere must be considered as an opportunity cost associated with Option B. Finally, the tax benefit is essentially guaranteed (so in our example, a $200 risk free return), while sticking with the stock in Option B still comes with some risk.\"",
"Personally, I have been in that situation too often that now I am selling at the first tick down! (not exactly but you get the idea..) I have learned over the years to not fall in love with any stock, and this is a very hard thing to do. Limit your losses and take profit when you are satisfied with them. Nothing prevents you from buying back in this stock but why buying when it is going down? Just my 2 cents.",
"The stock price is not only based on the general market trend and the stock's current profitability and prospects, but is also based on prediction of how the stock's prospects might change in the future. In almost every case, there are professional investors analysing the stock's future prospects and considering whether it's over or under values for its current price. However even professionals can be totally wrong. If you feel like you have a good grasp on whether the stock will have improving or declining prospects over time, then you might be (if you're right) equipped to make a sensible decision on whether to hold the stock or not. If you don't think you have a good understanding about the stock, then an understanding of the general market direction might at least make stock in general worth holding. Otherwise, you are simply taking a punt. If you know of another stock that has better prospects, then ask yourself why you would hold onto the stock that you think will perform worse. But also bear in mind that (in my understanding) research has shown that, on average, people who try to pick stocks rarely do better than a random selection, and more stock trades means more brokerage (which thanks to brokerage losses would mean you will end up doing worse than average unless you really do know better than the market).",
"The standard answer on any long term stock is hold on during the rough times. You have not lost anything until you sell. If your concern is just that you are not certain where the stock price is headed, unless you need the money now and can not afford to hold on to the stock then I would hold it.",
"\"You should distinguish between the price and the value of a company: \"\"Price is what you pay, value is what you get\"\". Price is the share price you pay for one share of the company. Value is what a company is worth (based on fundamental analysis, one of the principles of value investing). I would recommend selling the stock only if the company's value has deteriorated due to fundamental changes (e.g. better products from competitors, declining market) and its value is lower than the current share price.\"",
"If the stock starts to go down DO NOT SELL!! My reasoning for this is because, when you talk about the stock market, you haven't actually lost any money until you sell the stock. So if you sell it lower than you bought it, you loose money. BUT if you wait for the stock to go back up again, you will have made money."
] |
8017
|
Purchasing ETFs when (pretty much) everything else is maxed out
|
[
"97836"
] |
[
1
] | ["184820","231972","97836","324697","100882","391876","176489","554674","351088","345199","226298","(...TRUNCATED) | ["Maxing out an IRA would probably be step 1, if you exceed that probably just aim for saving in a t(...TRUNCATED) | ["Most ETFs are index funds, meaning you get built in diversification so that any one stock going do(...TRUNCATED) |
7936
|
Why naked call writing is risky compare to Covered call?
|
[
"293767",
"363043",
"336541"
] |
[
1,
1,
1
] | ["336541","363043","293767","343613","281533","356490","63363","402778","553110","221881","163034","(...TRUNCATED) | ["\"There is unlimited risk in taking a naked call option position. The only risk in taking a cover(...TRUNCATED) | ["If the buyer exercises your option, you will have to give him the stock. If you already own the s(...TRUNCATED) |
3039
|
Can increasing my tax withholding from my full-time job cover FICA taxes for my freelance work?
|
[
"136804"
] |
[
1
] | ["252843","88214","87720","75893","445994","136804","223042","208216","540394","470898","283374","59(...TRUNCATED) | ["FICA taxes are separate from federal and state income taxes. As a sole proprietor you owe all of t(...TRUNCATED) | ["Technically you owe 'self-employment' taxes not FICA taxes because they are imposed under a differ(...TRUNCATED) |
7218
|
What margin is required to initiate and maintain a short sale
|
[
"32290"
] |
[
1
] | ["565909","32290","94062","266900","331606","469830","155957","247680","5573","326335","190928","441(...TRUNCATED) | ["If this is the initial transaction, the rules of a short margin account say that if you shorted 10(...TRUNCATED) | ["Depends on the stock involved, but for the most part brokerages allow you gain entry at 50%, meani(...TRUNCATED) |
2968
|
Should I prioritize retirement savings inside of my HSA?
|
[
"242124",
"388646"
] |
[
1,
1
] | ["242124","388646","402523","202140","352794","388145","241819","122061","96725","550808","147074","(...TRUNCATED) | ["\"Unquestionably I think the priority should be funding retirement through ROTH/IRA/401K over HSA (...TRUNCATED) | ["\"Unquestionably I think the priority should be funding retirement through ROTH/IRA/401K over HSA (...TRUNCATED) |
858
|
Is it bad practice to invest in stocks that fluctuate by single points throughout the day?
|
[
"146632",
"45185",
"122485",
"278450"
] |
[
1,
1,
1,
1
] | ["293027","42347","146632","241860","429418","254271","208898","208932","39927","179328","588377","3(...TRUNCATED) | ["What is your investment goal? Many investors buy for the long haul, not short-term gain. If you'(...TRUNCATED) | ["\"Yes. There are several downsides to this strategy: You aren't taking into account commissions. I(...TRUNCATED) |
1198
|
What are the consequences of IRS “reclassification” on both employer and employee?
|
[
"56718"
] |
[
1
] | ["56718","232544","367026","97852","433292","283374","394871","21910","37725","300254","316482","189(...TRUNCATED) | ["\"You are confusing entirely unrelated things. First the \"\"profit distribution\"\" issue with Bo(...TRUNCATED) | ["\"You are confusing entirely unrelated things. First the \"\"profit distribution\"\" issue with Bo(...TRUNCATED) |
8982
|
Are Exchange-Traded Funds (ETFs) less safe than regular mutual funds?
|
[
"454610",
"200360"
] |
[
1,
1
] | ["370244","358997","153112","473658","479420","332278","359201","392465","183898","288679","270992",(...TRUNCATED) | ["Behind the scenes, mutual funds and ETFs are very similar. Both can vary widely in purpose and po(...TRUNCATED) | ["\"I wonder if ETF's are further removed from the actual underlying holdings or assets giving value(...TRUNCATED) |
End of preview. Expand
in Data Studio
This dataset is a reranking-formatted version of the FiQA-2018 dataset from the BEIR benchmark.
Original Dataset: FiQA (Financial Opinion Mining and Question Answering)
BEIR Version: BeIR/fiqa
License: Available for research purposes
Task: Financial domain question answering
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