πππMost people think that Buying a stock is the most important investment decision. But what is more important is how to manage a profitable sale.
It would seem that there is nothing worse than selling a profitable stock and then watch the price continue to rally. The bad feelings associated with regret that that I have sold too early can often be worse than making a loss. That is because it is often accompanied by emotions that I have missed out on a better gain or that I could and should have done better.
However on the bright side, selling early if I have made a profit should not be regarded as a disaster but a blessing.
In fact it is rare to get all the profit that may be on offer.
What is more important in trading or investing is to have a plan with an exit strategy and with profit taking objectives.
I may opt to sell for a partial profit if the stock price has risen substantially - perhaps a third or half of a position. Staying with a partial holding allows me to continue to benefit from a rising price.
It is also important to watch for a correction. This can be managed by having stop loss levels that are raised if prices continue to rally.
FOMO or Fear of Missing is common feeling when it comes to investing or trading. I do not let it bother me too much as there are always plenty of opportunities in the markets to find winning stocks.
Ultimately it is up to each person's goals and risk appetite. Investing is very much a personal experience. My goal is to find great companies whose stocks selling below their intrinsic value and invest in them with a long term horizon.
Investing is marathon, not a sprint. As Warren Buffett likes to say "The stock market is a device for transferring money from the impatient to the patient." That means successful investing is about focusing on long term ownership and not reacting to short term fluctuations.
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Comments
Personally , I believe itβs how we look at money & the emphasis we place on money versus the goal & challenge of saving / investing or accumulating wealth & preserving the wealth we build that over time that is constantly being eroded by inflation & Taxes.
Looking at growing wealth should be seen as a hobby rather than being driven by FOMO or heard mentality . Many a hobby has turned into a lucrative business for many & I really believe this is how we should be looking at investing or building wealth, allow it to become a hobby & then you will be spending hours researching companies .
As you correctly said investing is a marathon, not a sprint, so for those new to investing think of investing in terms of 5-10-15-20 years strategy.so well done to you all for taking that 1st step at building your portfolio.
Happy investing everyone.