When/what stocks to sell after FIRE

[Fru-Gal]

I have a small amount of money (a couple thousand dollars) in individual stocks on Robinhood. I thought I should winnow this position down (although I don’t see ever getting rid of my BerkshireB shares I hold there).

With the recent rally some of my positions are very successful — 100% - 150% return. These are just 1-5 shares per company. Also most are long-term capital gains at this point. So should I just go ahead and sell them if I need to for the money? For some reason when you have 100% return on a single share part of me says I should hold on even longer.

[ixtap]

I sell what I want to get rid of when I need the money, without trying to time the market. I only look at individual lots for larger holdings to determine the most tax efficient sale.

[MustacheAndaHalf]

With the recent rally some of my positions are very successful — 100% - 150% return. ... For some reason when you have 100% return on a single share part of me says I should hold on even longer.

When I bought beaten up stocks in 2020, I did so on the belief "stocks recover".  I bought stocks at 1/3rd of their former price, and waited for them to triple.  If you're looking at stocks far below their highest price in 52 weeks, do you think they'll recover further?

[vand]

I'm not being funny, but... how the hell should anyone else know if you should sell your stocks, or when?

You haven't provided any remotely useful info like: if you think they'll do better than the market, what your expectations are, what your preferences are, what your investing philosophy is, what proportion of your overall wealth they make up.. like, literally none of that.

Did you buy these shares after carefully consulting consensus opinion on an anonymous internet forum? If not, why is its opinion now important in determining your exit strategy?

[Fru-Gal]

—less than 1/2 percent of TNW, not a significant or risky concentration of investment
—am FIRE
—yes they are stocks that I anticipate would continue to do well, in industries I believe in
—no one knows the future hence cashing out at 150% return not a bad idea
—I am in drawdown, no longer investing
—only hold one to five shares per position
—Have been selling index fund shares first but maybe these positions should go first

[PDXTabs]

Also most are long-term capital gains at this point. So should I just go ahead and sell them if I need to for the money? For some reason when you have 100% return on a single share part of me says I should hold on even longer.

I would certainly wait for long-term capital gains treatment. Other than that I'm not sure if any of us can tell you. I'm risk averse so I'd probably sell individual shares before index funds. But if you do that you might miss out on more gains from your stock selection and kick yourself later.

[JAYSLOL]

These stocks don’t seem to matter to your overall financial independence, so the question really becomes do you enjoy using some fun money to stock pick?  If no, sell all whenever needed/most tax advantageous and don’t think about it again.  If yes, then pick an amount, let’s say $2k, above that amount sell whatever you are least excited about, or don’t want to own for whatever the reason and use the $2k to own whatever stock interest you, once a year cash out any amount over $2k. 

[Wintergreen78]

Write down your chosen asset allocation. When you need cash determine your current asset allocation. Sell the stocks/bonds/ETFs that are over your desired percentage.

[vand]

I don't really understand people who buy single stocks buy not really in any meaningful amount (at least >10%) to make more than a rounding error to their outcome.

At 0.5% of TNW you can be the best or worst stock picker in the world and it doesn't make any difference.
 
So my advice is if you are going to dabble in stocks or anything else is to put in a meaningful amount that it will make more than a rounding error if you turn out to be a stock picking genius (or v lucky).

[PDXTabs]

I don't really understand people who buy single stocks buy not really in any meaningful amount (at least >10%) to make more than a rounding error to their outcome.

Because single stocks offer asymmetric returns. If you put 0.5% (or less) of your net worth in a single stock then that stock going to zero won't bankrupt you. But if you picked a real winner (eg, AMZN, AAPL, or TSLA at the right time) then you would have many orders of magnitude of return.

[vand]

I don't really understand people who buy single stocks buy not really in any meaningful amount (at least >10%) to make more than a rounding error to their outcome.

Because single stocks offer asymmetric returns. If you put 0.5% (or less) of your net worth in a single stock then that stock going to zero won't bankrupt you. But if you picked a real winner (eg, AMZN, AAPL, or TSLA at the right time) then you would have many orders of magnitude of return.

0.5% in a x100 bagger still only increases your TNW by 50% in total - a nice boost, but not really a game changer in how it affects your lifestyle.

And that's provided you put ALL of your single-stock picks in 1 single stock and it does x100. In reality no one does this.  For everyone who got a nice handsome multibagger return on AMZN or TSLA you don't read about the 20 or 50 or 100 other single stocks they held that didn't do that.

That's not to say that you can't do better than the market as a stock picker, but nobody just picks out a single stock as their only venture in active and does x100 in it, and I'd wager the number of people who pick out a hundred bagger and have the sense to leave it alone and allow actually allow it to reach x100 is about 0.0% rounded off to the nearest .0%.