Most folks on here (not all tho) are of the "buy and hold forever" variety. This goes hand in hand with the idea of being an index investor. Which means we buy broad market funds and then hold them forever, through all the dips and rises.
I do not buy individual company stocks. I don't give a rat's ass about chasing high returns and worrying over the daily pricing and whether I made a poor move here or should have sold out there. Slow, steady and boring is awesome. So that's why index funds are my cup of tea.
You can sell if needed, but you can also take capital gains/dividends (if there are any) as cash.
As I am FIREd (I no longer work at all and all expenses are paid out of my investments) I sell off funds periodically, but also do take out dividends/cap gains as cash from my taxable brokerage account. I also let my tax deferred accounts reinvest the cap gains/dividends so mostly I end up slowly growing the amount of funds I hold, as the reinvestments end up being higher mostly.
The rule of thumb is to figure out how the market actually works, then do your IPS, figure out your asset allocation and stick to the plan going forward.
Read Jim Collins' stock series to get a great understanding of how this stuff fits together. Check out his site or get his book (based on the site). It is absolutely one of the best, easy to understand guides I've ever read.
http://jlcollinsnh.com/stock-series/Check out
Bogleheads site for any possible question you could have regarding index investing.
The following are the steps I took:
1. Wrote up an investment policy statement to figure out my goals and plans. This is my blueprint for what goes where, why I do A or B if this or that happens, where I want to go in the future, and how I'm going to get there.
https://www.bogleheads.org/wiki/Investment_policy_statement2. Figured out my asset allocation (AA). This is based off of how much risk/volatility I felt comfortable with and set up my portfolio to reflect my AA (which would also include any real estate).
https://www.bogleheads.org/wiki/Asset_allocation 3. I then took a look at what I held where, sold off everything that didn't match up with my goals in my IPS (I decided I was going to be an index investor holding only 2-4 total mutual funds across my entire portfolio, YMMV). I built a lazy portfolio and I am quite pleased.
https://www.bogleheads.org/wiki/How_to_build_a_lazy_portfolio
