Chapter 10: Well Bought Is Half Sold
1. A
stock bought right is half sold.
2. A
lot of our selling decisions will be made for us by the market itself.
3. When
you start investing in low-priced breakout stocks, it is necessary to monitor
your portfolio on an ongoing basis.
4. When
you have a loser:
a. When
a stock moves against you, see what you missed in the original analysis. Ask
yourself: Are you wrong or are you just
early?
b. You
are looking for material negative changes in the company or its outlook since
you originally bought the stock. If there are any, then you want to sell the
stock.
c. Watch
what insiders are doing with their stock. If there is persistent large selling
by officers and directors you want to challenge your original conclusions, and
to sell your stock right away.
d. Things
changed so you changed your opinion, which is the smart and correct way to
approach the sale of a stock that did not work.
5. When
you have a winner:
a. Check
the fundamentals and news from your winners and make sure you think they can
still breakout higher and deserve a place in your portfolio.
b. Ride
the wave and let your profits grow (when the fundamentals are improving).
c. If
business starts to slow and is no longer improving, it is time to sell.
d. As
a stock climbs higher, it’s often a good idea to scale out of a stock (i.e.,
it’s a great idea to sell some of your position when a stock had doubled in
price).
e. My
favorite reason to sell a stock is because it’s been acquired. To close the
deal buyers have to pay a premium to the current market price and this means
profits for you!
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