Let's discuss profit taking. 💰
Overwhelmingly, we are still analyzing fair prices, looking for dips, and predicting potential growth. But when we get there, when do we actually pick profits ?
I would like to discuss this. We are all different of course I hope for different opinions, perspectives. Next, let's not mix trade into this at all. Let's make cases that we hold a stock for at least one quarter. I guess we are all long term investors here. Some of us are even playing around with trading. Further, I think even most of us will agree when I write the statement that long term means 20 years of holding for example, period. I just have to make capital somewhere else and invest it or reinvest the dividends.
Of course, though I know all these methods. Still, after all, in investing, we also want gains not just dividends and to continue to appreciate those and not just look at growth curves for 20 years for example. 📈
We now have the vast majority of the Indices on new or current ATH. We see that growth is mainly just due to large companies in the tech sector driven by AI. Many of us are profiting now on Meta, Nvidia, Microsoft ...and more, I could find a few more. I'm certainly not arguing that one should get rid of any of these stocks altogether. However, some of the titles are already really high and I think that with some certainty some correction is bound to hit them ...which is why I often ask and wonder what about divesting some of it, taking the profits and reinvesting them somewhere where the price is still low, where high rates are keeping the sector still down, or simply where buying makes more sense to me than overbuying these technologies at high prices now. And then buying them back when they fall. 😊
Are you thinking that way too? Do you have a strategy of eventually selling the company, or just selling a portion of your portfolio and reinvesting the profits in undervalued stocks? For example, if you take profits, does that make up 20-30% and let the rest keep working? 💰
Here for me it depends very much on the investor's strategy, I personally always, when I see an appreciation that is already possible for me, so I choose and reinvest in the opportunity that I currently see, when I do not see it, I invest the profit in the index/LVMH.
Oh, I agree, I certainly do that with most stocks too, but with the big tech ones like Apple, Microsoft etc...there I keep wondering what the fraternal appreciation is, because I might like the profit already, but I also have the feeling that such a company will still be around in x years to be profitable. It may not, but the probability is greater. And with them, I'm just at a loss...
In this case, I realize at least some profit, e.g. I collect 50% of the profit, realize something and let the rest run out in such companies.
I'll think about it when I have something 😂
But seriously, I've only realized a gain twice so far and three times I've realized a loss on both decisions is it important for me to assess is there a defensible rational reason? I've been thinking this for a while now? Will I feel good about the change? But on the other hand, isn't the feeling just fomo? 🤔
I agree with the reasons, thanks. The main one with the fomo well ...I might have had that with Meta, I know it's a company that will be around in 20 years I dare say and I don't believe anyone has the power to unseat it from the top of the social networking field at the moment due to the size of its users. Of course, as I added to the post afterwards, it has reached a valuation that I already liked a lot, I said to myself $300, wow, I'll pick it up because who knows what else is coming from the Fed etc, and I'll put the profits into maybe a REIT or undervalued companies, well, but if I hold on till now ... but that's if and I'm happy for any profit, just exactly, the psyche plays in then too when one sees it keep growing, but he got off the train. 😊
I'm thinking about it a lot here, for example I have $CRWD+2.2% which I was already considering to sell at 300$ I was already pretty much broke to do it no less then comes the rocket again at 330$ and one thinks so I'll wait what this week... 😃 Otherwise, of course, I have stocks that I accumulate for several years and there are stocks that I will probably have no problem selling after reaching the price I have for them. 🙂
That's what I tell myself too, and for stocks I hold just for that profit and know I might sell within a year, I'm fine. What you're experiencing now with $CRWD+2.2% and had with $META+2.3% (I added that to the post). I'm happy for the profit, but I'm wondering today if even those stocks that are long holdings because they will be with us for many decades I believe, even this one I think is strong enough for a few years, so how do you do that, some ratio of maybe what to sell and something to keep? ...because in the future the price will go even higher if they keep dominating the market. 😊
Well as yet I don't want to sell too much, but it makes me enough percent of the 20 I have so far appreciation which I think is pretty decent first year I invest it will be in April and so far +20% 👍 as if some giant like Google maybe went to 100 so sure I will sell half of CRWD and go to it 😃 but so far I will leave well ..
Only realized profits count;) The problem is where to invest it. The more complicated you make it, the worse it gets, and it's quite likely that everything will dry up at the same time, and then the best companies will still do better in the long run than the "undervalued" ones.
Personally, I've sold quite a few companies, but none just to wait for it to drop, then buy it back later.
So I must correct myself, I sold $SQ-1.2% at some ridiculous levels and then picked it back up after a while when it dropped about -70%, but that was a coincidence;)
That's a fact, I'll add a small addition to the post so I don't write it as an example to every reply you make. I also don't find myself going back to that company afterwards, I've only done it with $ENPH+7.7% which I just trust to make money again and now I'm considering $TSLA+0.6% because even there I think it will go around that $240 or so again. ...but yes, one can complicate things with this, but just what if I want to take some profits to free up money for reinvestment, but at the same time I don't want to lose that company, because as you write, with the big tech, even if there is a correction, some downturn, they will be just as strong and I don't really believe that in our lifetimes something will come along to replace Apple, Microsoft, etc. 😊