Earlier this week, on my show, I was asked about selling a stock after one decides to take a tax loss (hint: you cannot buy it back for at least thirty days). This led up to a very important question: When does one sell? It is actually the biggest question every investor faces. After all, when it is all said and done, there are stocks that make a lot of money for many, while others actually lose a lot of money for many. But, why? Simple: because some people sell too early, or they sell too late…
|Duration||1 to 30 days||30 day to 6 months||Six months +|
|Vigilance (daily)||Four Times||Two times||Once|
Ideally, an investor should have an equity portfolio in various investment themes. In part, to take advantage of volatility, but also to resist the urge to close long-term ideas too soon, and take too long to close short- term ideas. However, it is easier said than done. Yet over the course of any given 52-week period, the rationale typically plays out to where the advantages are clearer. The decision-making process for buying and selling stocks is the same across all levels of traders. People who buy as day traders, should sell as day traders; People who buy as intermediate traders, should sell as intermediate traders; and etc.Obviously, the idea is to find stocks that are undervalued for intermediate and long-term investors. Traders should actually forget about fair value and look at the Greater Fool Theory which reminds a buyer that though they may be paying a lot for a stock, there is someone in line behind them ready to pay more.
- Fundamentals (earnings, market share, margins)
- Fundamentals (products, pipeline, potential)
- Fundamentals (earning, market share, margins)