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'm already strongly considering it too, because big tech is really high enough and the Fed will still hold it, those rates high too.
For me, in this case, it's the most reasonable solution, it's as you write.
Exactly, well, the Fed is going to be tight, but the AI growth is strong too, so we'll see who "wins"
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'm thinking about it a lot here, for example I have $CRWD+0.7% which I was already considering to sell at 300$ 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. 🙂
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.