Charles Payne

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…

Investing GuideTraderIntermediateLong-Term
Duration1 to 30 days30 day to 6 monthsSix months +
Risk5%10%20%
Reward10%20%50%
Vigilance (daily)Four TimesTwo timesOnce
Financial commitment20%60%20%
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.

Main Tools

Trader

  • Charts
  • Volume
  • Momentum

Intermediate

  • Fundamentals (earnings, market share, margins)
  • Charts

Long- term

  • Fundamentals (products, pipeline, potential)
  • Fundamentals (earning, market share, margins)

Charles Payne

Charles V. Payne is a regular contributor to the Fox Business and Fox News Networks. He is also the Chief Executive Officer and Principle Analyst of Wall Street Strategies, Inc. (WSSI), founded in 1991 which provides subscription analytical services to both individual and institutional investors.