Author Topic: Deciding when to sell is tough - no?  (Read 2574 times)

canonian

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Deciding when to sell is tough - no?
« on: January 10, 2017, 03:12:32 PM »
I took some money and threw it at a few cannabis stocks.  One of them went absolutely bonkers hitting 10 fold its original price in a matter of a few months, then back down to about 5 fold.  I was tempted to sell, it was a massive return however I think there is huge upside.  Recently, actually today I'm sitting just under 15 fold the original buy price from June of 2016.  Now hind sight is 20/20 and I can clearly say I'm glad I did not sell.  I should have been buying more along the way, anyway tomorrow could be a bust or move into a 20 fold return.  Might see a dip again then back into the stratosphere a month fro now.  Who knows.

So when you buy a highly speculative stock with huge upside do you ride it out for years or should I sell to capture the green.  I think when we are talking about a huge return like this tax consequences are not a problem however it is under a year!!  Dang it!

I always find that it is way harder to decide when to sell versus what and when to buy.
« Last Edit: January 10, 2017, 03:15:44 PM by canonian »

RichMoose

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Re: Deciding when to sell is tough - no?
« Reply #1 on: January 10, 2017, 03:37:19 PM »
I took some money and threw it at a few cannabis stocks.  One of them went absolutely bonkers hitting 10 fold its original price in a matter of a few months, then back down to about 5 fold.  I was tempted to sell, it was a massive return however I think there is huge upside.  Recently, actually today I'm sitting just under 15 fold the original buy price from June of 2016.  Now hind sight is 20/20 and I can clearly say I'm glad I did not sell.  I should have been buying more along the way, anyway tomorrow could be a bust or move into a 20 fold return.  Might see a dip again then back into the stratosphere a month fro now.  Who knows.

So when you buy a highly speculative stock with huge upside do you ride it out for years or should I sell to capture the green.  I think when we are talking about a huge return like this tax consequences are not a problem however it is under a year!!  Dang it!

I always find that it is way harder to decide when to sell versus what and when to buy.

Many people hold on to volatile stocks for too long and lose everything.

Many other people sell volatile stocks too soon and don't make as much as they could have.

Smart people take their winnings and walk away from the poker table when they're ahead. Don't confuse investing with gambling. :)

jjcamembert

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Re: Deciding when to sell is tough - no?
« Reply #2 on: January 10, 2017, 04:50:00 PM »
I have been burned on the downside with this thinking as well: stock is looking like a great bargain at $9, buy it, oh now it's $7, buy more, now it's $1... hmmm, not looking so good now.

The only solution I know of to this problem is to cap your upside / downside. Ideally while collecting basis (i.e. covered call). Instead of looking at each trade as, "This one's going to be a home run!" set a limit of if it goes up, I'm selling at x, if it goes down, I'm selling at y. Have lots of small, diversified trades and be happy when you are making some money rather than disappointed that you could have made a lot more money.

Dave1442397

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Re: Deciding when to sell is tough - no?
« Reply #3 on: January 10, 2017, 05:35:52 PM »
Well I bought Facebook at 20, and sold it at 40 feeling pretty damn smart.  When it hit 100, I didn't feel as smart.

You still doubled your money, so that's smart.

I still remember a co-worker asking me to tell him when Cisco dropped to $83, which is where he jumped in with both feet. As far as I know, he still had it when Cisco went down to where ever it ended up...$5 or $6?

Retire-Canada

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Re: Deciding when to sell is tough - no?
« Reply #4 on: January 10, 2017, 05:53:56 PM »
I buy when I have money and I sell when I need money. It's a pretty simple choice.

LAGuy

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Re: Deciding when to sell is tough - no?
« Reply #5 on: January 10, 2017, 08:14:45 PM »
When it's "play" money, it's probably best to just let your winners run. I'd probably sell when/if it reaches some significant portion of my portfolio...say 5%. That said, I don't think any money is "play" money and I don't invest in individual stocks (though I did when I was younger and more foolish).

powskier

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Re: Deciding when to sell is tough - no?
« Reply #6 on: January 11, 2017, 12:42:48 AM »
I had a friend who worked his rear off to "invest" $10k in penny stocks with the goal of making $1mil. He made his $1mil and changed/made a new goal  to turn it into $10mil. He ended up losing his shirt and quitting with $15k.
It is not real money until it's sold. Make a target, hit it, put the win somewhere where you won't gamble it away and move on.

canonian

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Re: Deciding when to sell is tough - no?
« Reply #7 on: January 11, 2017, 10:42:47 AM »
When it's "play" money, it's probably best to just let your winners run. I'd probably sell when/if it reaches some significant portion of my portfolio...say 5%. That said, I don't think any money is "play" money and I don't invest in individual stocks (though I did when I was younger and more foolish).

I kinda agree however when the play money turns into some serious money you start to think a little differently.

canonian

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Re: Deciding when to sell is tough - no?
« Reply #8 on: January 11, 2017, 10:44:52 AM »
Have lots of small, diversified trades and be happy when you are making some money rather than disappointed that you could have made a lot more money.

Agreed!

financiallypossible

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Re: Deciding when to sell is tough - no?
« Reply #9 on: January 12, 2017, 10:36:37 AM »
I took some money and threw it at a few cannabis stocks.  One of them went absolutely bonkers hitting 10 fold its original price in a matter of a few months, then back down to about 5 fold.  I was tempted to sell, it was a massive return however I think there is huge upside.  Recently, actually today I'm sitting just under 15 fold the original buy price from June of 2016.  Now hind sight is 20/20 and I can clearly say I'm glad I did not sell.  I should have been buying more along the way, anyway tomorrow could be a bust or move into a 20 fold return.  Might see a dip again then back into the stratosphere a month fro now.  Who knows.

So when you buy a highly speculative stock with huge upside do you ride it out for years or should I sell to capture the green.  I think when we are talking about a huge return like this tax consequences are not a problem however it is under a year!!  Dang it!

I always find that it is way harder to decide when to sell versus what and when to buy.

This is reason enough to purchase such a stock within an IRA or a Roth IRA (if you know ahead of time that it might be one that goes bonkers). Then you're not faced with that "I haven't held it a year" problem.

Of course, the downsides of placing a speculative stock of this nature into those accounts is that these stocks almost always don't pay dividends and you want to place your bigger yielding stocks into those accounts. Furthermore, if it goes bonkers in the opposite direction you can't claim any capital loss if you choose to sell at a loss.

Don't view a sell as all or none. You could always choose to take a bit of money out of your position if you want to diversify it into something else. Then you could do the same thing again once you've hit a year and have that chunk be taxed more favorably. After that, you'd still have recovered your initial money and probably much more than that. You can choose to just let your remaining position ride and hold for the long term if you've studied and truly believe in the company's management and operations.

Another way I'd look at selling:
What percentage of your total investment assets are in company X?
Are you comfortable with that percentage?

Use the answers to these two questions to help drive your choices.

Mr. Boh

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Re: Deciding when to sell is tough - no?
« Reply #10 on: January 12, 2017, 02:06:13 PM »
If it were me I would sell the amount of shares equal to two times your initial investment. That way no matter what happens with the stock in the future you have doubled your money.

I agree it is harder to decide when to sell than when to buy.

Fireball

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Re: Deciding when to sell is tough - no?
« Reply #11 on: January 13, 2017, 11:57:27 AM »
I took some money and threw it at a few cannabis stocks.  One of them went absolutely bonkers hitting 10 fold its original price in a matter of a few months, then back down to about 5 fold.  I was tempted to sell, it was a massive return however I think there is huge upside.  Recently, actually today I'm sitting just under 15 fold the original buy price from June of 2016.  Now hind sight is 20/20 and I can clearly say I'm glad I did not sell.  I should have been buying more along the way, anyway tomorrow could be a bust or move into a 20 fold return.  Might see a dip again then back into the stratosphere a month fro now.  Who knows.

So when you buy a highly speculative stock with huge upside do you ride it out for years or should I sell to capture the green.  I think when we are talking about a huge return like this tax consequences are not a problem however it is under a year!!  Dang it!

I always find that it is way harder to decide when to sell versus what and when to buy.

I only stock pick with a small amount of money, and the focus for me is to not make any big mistakes. Even at the expense of some upside. So, I always sell at up/down 30%.  It's only play money and honestly, being right is more fun than making a bit of coin.

SuperMex

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Re: Deciding when to sell is tough - no?
« Reply #12 on: January 15, 2017, 03:21:38 PM »
I sell half anytime it doubles at this point I feel like I'm playing with the houses money and I just let it ride.