If a stock takes off when should you sell it?

Question

Is there a rule of thumb? I guess not being too greedy would be one of the rules.

Answer 1

You will never be able to sell at the top, so I wouldn't try. The only thing you can do is keep checking the fundamentals and the company news and use good judgement.

Answer 2

Interesting question with no real good answer. I can not begin to relate all the stocks I sold too soon or all the stocks I held too long. It is extremely difficult for a person to continue to hold a stock after it has doubled in price. The tendency is to take the money and run. Human nature. Yet, the really big money is made by buying and holding sound investments for long periods of time. Remember, if you sell you have to pay taxes. If you do not sell, no taxes are due.

The real problem comes during periods like the late 90's when technology stocks continued to rise and rise for no really fundamental reason. Do you hold on and continue enjoying the ride or due you sell and take your profits. There are hundrends of thousands of investors that by 2002 had wished they had sold.

One strategy that over time has proved to work is to use a trailing stop at say 15% to 20% off the high. That way you can enjoy the ride but also protect yourself against a sever market turn.

Answer 3

It depends on why you bought the stock. If you did your homework and became convinced that the investment would be a solid one, there is no reason to abandon a purchase that confirmed your judgment. On the other hand, if you bought because the share price represented value, and the higher share price cannot be justified, it might be a logical time to sell and take your profit. I don't think you can manage this matter effectively by a mathematical rule of thumb (e.g., sell when the stock rises 20%, 50%, whatever) because the circumstances are different in every case and must be taken into account. In other words.....it depends.

Answer 4

In fundamental analysis, as a rule, you sell when the company's financials have deteriorated and when there is no alternative way but to liquidate. However, the hallmark of sucessful investing is keeping away from selling your stocks when the fundamentals are still intact. When the price of the stock dips down, you welcome the opportunity of buying more of a good stock.

Conversely, technical analysis is different. You sell when there is a change of trend in the long term and when the price of the stock has reached its peak. But it's really hard to time the market and the best way, using this approach is to have an exit strategy and cut losses.

Enjoy and Good luck!

Answer 5

Selling stock at high price is little bit difficult. But timing the market is important rule in trading. But you can compare the present price with 52 weeks high prices. If its higher than 52 weeks high you can sell your stock. And also put your high on future prospects of company and industry.

Answer 6

Yes, sell it when it goes up, then never look back. That transaction is ended.

The rule is to buy low, and sell high.

If you make only $0.01 profit you are ahead of the game.

Don't look back and say, wow, if I would held, I could have made $100.0 profit. You will drive yourself wacko that way. You made a profit, large or small, revel in it.

Stocks will always go down after you buy them. If you sell when they are down, you will always lose money.

Stocks will always go up after you buy them. If you sell when they are up, you will always make money.

Most people buy them when they are up, then panic sell when they are down. That is why they lose money.