I have been covering this topic a lot in this blog.Â I am constantly thinking about it.Â There are two main reasons beside necessity of on why you should sell.Â You may sell because you want to get rid of the bad investment.Â You may also sell because you are happy with the gains it currently has.
Covering Your Losses
When it comes to this, I don’t know what number it best.Â It is all about your stock strategy and how much risk and time you want to have.Â I have heard the recommendation that you should sell at 10% of your original investment.Â Now, I guess a particular stock my swing 2% on an active day of trading.Â You could hit 10% fairly quickly without too much happening.Â I am leaning towards a 15% limit.Â If it hits 10%, I’ll evaluate the stock once again.Â Once at 15% of a loss, I will sell.
Covering Your Gains
Quitting while ahead is usually a good thing to do time to time.Â For the Buy and Hold strategy, you may never sell until you retire.Â I think you should monitor your gains and after a solid gain of 30%, evaluate the stock and possibly get out.Â 30% is worth your time and can be accomplished rather quickly in the stock market.Â Anything much higher, you are hoping for a miracle.Â Depending on the investment strategy, getting 15% gains for a month or two is pretty good money.
In my Momentum Portfolios, there is only one stock that is lagging behind.Â Yahoo’s momentum has fallen and it is below 10% of what I bought it at.Â I noted it and will evaluate it further when it reaches 15% or lower.Â This week has been tough for stocks in general.Â I do think things will get better within the week and therefore, will not sell at the moment.