Question to all I generally hold stocks for long term with some being dripped and some not. Lately I have been tempted to sell of the profits of a stock and invest it somewhere else mainly on stocks that have shown a gain of 20-25% in a 3-6 month window. Has anyone done this or thoughts?
Brian Harrigan: The 20-25% does not include dividends just the price of the stock
Charles Knitter: That would be trading and is an entirely different strategy. Depending on what the stocks are, you may be better off selling some or all and rebuying on a pull back. That 20-25% doesn’t mean anything until you pull the trigger and sell. Honestly, unless the fundamentals showed a burst was eminent, I would have held onto them. It also depends on the price. If you are dripping you won’t be picking up as many shares when you reinvest and you might be better off liquidating so you can pick up something with better value. It is honestly a case by case judgment call for me.
Brian Harrigan: You make very good points. Thanks for your input. Just trying to see what others think
Charles Knitter: You are welcome. With all being said, it is also a good idea to reassess your long term holdings at least once a quarter to make sure their performance is on point and reinvest your capital if necessary. Sounds like you are on the right track to me.
Brian Harrigan: Charles Knitter thank you!
Justin Swierczek: Buy and Hold…..forever
Brian Harrigan: I wish I felt the same but I do like the reassess your portfolio each quarter as we all know how companies can change over time and not always for the best
Justin Swierczek: Companies aren’t going to change Q after Q. If you haven’t done enough research to hold firm on your thesis for 5 years + then you haven’t done enough research.
Brian Harrigan: Justin Swierczek last time I checked Warren Buffet sells stocks even a year later if he does not see the companies plan progressing. I am not here to argue with you. It’s a general question and you are more then able to have your opinion however I do like other people’s comments above that make more sense then just buy and hold forever.
David Scott: Buy and hold forever is the best case scenario but things change. I buy some companies determined to hold forever and others are more for trades but when I buy it I have learned the hard way that you have to know before you buy which it is. If you have owned something and you no longer believe in it than you may want to exit. If you just want to sell high and than reenter again later than you are assuming you can pick the high point and get back in at a lower price, which is risky and not something I recommend.
Brian Harrigan: Thank you for your input. I am by no means a day trader the reason I asked the question is when a stock goes up 25% in a short period of time it makes me question how does a stocks value increase that quickly in less then a quarter. I have only started a serious portfolio a year ago and am trying to learn from experienced investors like yourself
Chris Cosico: No one ever got hurt selling – but in this bull market, i’ve definitely sold thinking the same stuff you’re thinking and missed out on gains – it’s a good problem, but still a problem
Dave Hayden: The trouble is you may never get the chance to buy back in. The goal is to make 10x, 20x, etc. If you really believe in your choices long term 25% is chump change.
Brian Harrigan: Very fair statement. I may have to reassess my portfolio and see if I am long on the companies I own and sell the ones that don’t fit that criteria.
Toni Nikkanen: I did this once. It went fine but I could just as well not have done it:I sold O at $58 because it was “ridiculously high” and bought Pembina Pipeline Corp with the money. Well, now O hovers around $67-$70 and buying it back would cost me a lot…OTOH, I increased my annual dividend income with this move, so it was not completely stupid. But I must avoid realizing any more profits this year to avoid capital gains tax 😉
Joe Steyer: Wen ever I hear buy and hold forever I always think of Sears. That being said I have a few mutuals I have owned for a very long time.
Charles Knitter: I think of GE and Sears. It is always good to check on your investments, if only to make sure they are still good.
Joel Shankster: Every once in awhile I will trim 20% of a stock if it gains more than in expected and reinvest in a dividend stock that is trading lower. It satisfies my urge to sell all the shares and I slowly transition my way of thinking to buy and hold forever. I do this less and less as time passes and I focus long term.
Brian Harrigan: Well said, thanks for your input
Annette Havrilla: I have a couple non-dividend stocks I do this with. One was Tesla when it went up 50% in a month, then I bought back in when it had a dip. But I usually hold my dividend producers long term.
Brian Harrigan: Ya the quick gains like that is what I am referring too. Sounds like it worked out for you. Great job
Coelho Zé: It’s never a good idea, my motto is if it’s green after a year or more it’s a keeper
Kitty Wilson Pingston: Make sure you use discount brokers like Scottrade or TDAmeritrade. No advisory people. They only want to make money off your money and don’t care about you and will invest where they make the most money on yours. Do your homework and pick good solid companies.
Brian Harrigan: Great points, I do not use a stock broker, I use questrade in Canada where I manage my own portfolio
Rob Tiger: Robinhood
Dev Chen: Some questions you might ask about the position.1. What percent of your portfolio does it represent? (if it’s highly concentrated, you could make a case to diversify).2. What are the fundamentals and the outlook of the company, the sector? Do they justify the current multiple?3. Are there significant barriers to entry? Is the size of the MOAT increasing, flat, decreasing?4. If you were to sell, do your new candidates measure up in terms of fundamentals, outlook, MOAT?5. Don’t forget to add in taxes and transaction costs to your balance sheet. (these can be non-negligible in case of frequent switching).Answering these questions (and others) might help guide your decision.(selling a covered call might be a strategy for you to consider).Hope this helps!
Brian Harrigan: Wow thank you so much as this is great information to base my decision on
Dev Chen: One key clue (for dividend paying stocks), is the dividend and the quality of that dividend. I’m from the “dividends don’t lie” school of thinking (there are 2 books, “dividends don’t lie” and “dividends still don’t lie” that I like). How many years o…See more
Andrew Hollingsead: Valuations are hard and based on non-uniform, subjective metrics. The principle has been skewed a bit with the rise of index funds, but there there is one party who believes that a stock is a good place to park capital for each party cashing out.