When do you take profits?

[redsfann]

My question is this: Do any of you have hard and fast rules as to a dollar amount or percentage gain before you take profits? I never really have had a benchmark amount before taking profits--at least when dealing in blue-chip companies- i do when dabbling in penny stocks or other volatile securities--its really been if I feel the stock has continued potential to rise in price.

I bought two stocks back on 3/20, CEG and DEO. One has risen 15% since purchase and the other 10%. They are in my SEP so there are no tax consequences if I sell to realize a profit. I'm thinking of selling enough shares of each to take the profit and letting the rest ride.

Any thoughts from anyone on this strategy? What would you do if you were me? Thanks in advance for your thoughts on this topic.

[MParris86]

I dont think there is any steadfast rule; it depends on the stock you are holding and the risk factor you are willing to take in continuing to hold it.

Me, personally, will check the tickers everyday but considering that most of my portfolio is in stable blue-chips with healthy dividends, I plan on continuing to add to my positions and let my dividend reinvestments accumulate over time. I am young, so that is my primary strategy right now so even if one of my stock spikes or dips, I will continue to hold my ground.

I do, however, dabble with 15-20% of my portfolio in speculative stocks, primarily biotech. With the big short positions, they are certainly volatile. However, this is where you are going to have your big jumps and drops, so you have to be on your toes. Alot of these stocks move on big news (earnings announcements, a story in the WSJ, an FDA approval, etc.) So in that case I would prepare for both sides of the story, for good news I would put in limit and stop loss orders to lock in profits at a set % (your choice) and/or minimize any losses with a stop-loss order (10% is usually a good benchmark).

Basically, I don't think I've helped you at all as many of my strategies are similar to yours. I am in no means an advanced investor, so take it as you will. Do what you feel is right and take profits when you think it is a good time. If you continue to lock in double digit returns, you are doing really well. Remember, bulls make money, pigs get slaughtered. Take your profits and play with the houses money.

[redsfann]

Thanks, MParris86 for your reply.

I,too, also check in daily as to where my holdings are at and what they are doing. I bought these two stocks after a lot of studying up on them, and I invested a decent % of my total portfolio. I am planning on keeping a close eye on their movements the next 4 trading days and will most likely take the profits before going on vacation starting on May 16th. I will take the profits off the table and leave the rest as I think these two stocks have some more growth in them over the next 6-12 months.
I've had many penny stocks show these types of gains over such a short period, but in that case I was looking a profits of 500-1500 dollars.
With these two the profits are near the 5 digit range and it would be foolish on my part to watch these two stocks pull back to near my purchase price without locking in the gains they have made since 3/20.

[Kevin]

Im a buy and hold guy so my answer wouldnt do you any good, HOWEVER, if the stock moved on valuations I'd continue to hold.

If it was moving fast on SPECULATION, I'd dump it once it went up 50% or so.

I knew guys that had IRA's go up 100% back in the tech boom around 1999-2000 that didnt sell.

What the hell were they waiting for? Why not lock in profits.

Each situation is unique, but at some point, Id either take it off the table at around 50% gain on a speculative stock or sell off all that i had invested and let the profits ride. Hell, I'd sell off some of the profits too to assure that I made a gainer out of it.

Lastly, I had a chance to buy in on google early. I got some and sold once it went up a bit. Im ok with that. I could have made a couple hundo a share off it, but I was happy with the gain. Google is a cinderella story. For every Google, theres 10 other stocks that went up and then back down when one should have locked in profits (imo)

The bottom line is that whatever your decision may be, it's one that you have to be able to sleep with each night.

One should always keep things in perspective that in all candidness, 12% is a nice return for a year. Once I get up into the 50% range I start thinking it's time to get out.

Conversely, I bought CMG in the high forties and its bombed up to 85 or so which is a 100% profit, AND I AINT SELLIN' cause their business is strong as anything I've seen in my lifetime.

I guess everything is unique and there is no general blanket statement that can be made re: stocks.

It sure is fun ****!

[Daws1089]

Originally Posted by Kevin

Im a buy and hold guy so my answer wouldnt do you any good, HOWEVER, if the stock moved on valuations I'd continue to hold.

If it was moving fast on SPECULATION, I'd dump it once it went up 50% or so.

I knew guys that had IRA's go up 100% back in the tech boom around 1999-2000 that didnt sell.

What the hell were they waiting for? Why not lock in profits.

Each situation is unique, but at some point, Id either take it off the table at around 50% gain on a speculative stock or sell off all that i had invested and let the profits ride. Hell, I'd sell off some of the profits too to assure that I made a gainer out of it.


Lastly, I had a chance to buy in on google early. I got some and sold once it went up a bit. Im ok with that. I could have made a couple hundo a share off it, but I was happy with the gain. Google is a cinderella story. For every Google, theres 10 other stocks that went up and then back down when one should have locked in profits (imo)

The bottom line is that whatever your decision may be, it's one that you have to be able to sleep with each night.

One should always keep things in perspective that in all candidness, 12% is a nice return for a year. Once I get up into the 50% range I start thinking it's time to get out.

Conversely, I bought CMG in the high forties and its bombed up to 85 or so which is a 100% profit, AND I AINT SELLIN' cause their business is strong as anything I've seen in my lifetime.

I guess everything is unique and there is no general blanket statement that can be made re: stocks.

It sure is fun ****!

CMG is one hell of a stock. they should be splitting and going up to 80 again in no time. I'm actually trying to start a franchise here in my hometown with CMG. great food, great management, great business. Smart man to hold on to that sucker.