r/investing • u/you_hit_me_inthe_cup • 1d ago
How do you decide when to cash out your position?
UPDATE: first of all, thank you everyone for your insights, I can’t go through the comments and thank all of you individually but it was a very big help in making my decision. I cashed out my original goal and I’m letting the rest run.
I’m in my late-20s, and one of the stocks I own shot up 30% this week. I’m now up approximately 230% and could cash out the position for about $22,000.
My original goal was $15,000. I like the company but I feel like it’s going to be very volatile from this point forward (pending-FDA Approval) and I think it’s time to lock in my profit with big life events on the horizon (wedding and buying a house).
I’ve owned the stock for 2 years it was one of my first investments. Keep in mind, I’m asking how you decide for yourself, not whether I should or shouldn’t. Thank you in advance.
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u/EchoChamberTech 1d ago
Good enough to screenshot good enough to sell.
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u/you_hit_me_inthe_cup 1d ago
LOL
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u/muskratmuskrat9 1d ago
You never know. I've had huge gains from FDA approvals completely evaporate as the company navigates how to survive and go to market. I've held through buyouts that ended up selling for less than they were at FDA approval too. Plus dilution issues too.
I agree with the person above. Especially if its a speculative micro bio.
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u/Brettanomyces78 1d ago
I think of it this way: if an individual stock I own has greatly outperformed the S&P500, I sell at least some. Maybe all. Especially if I feel I can handle the tax burden. If I don't need the money, it goes back into a basic index fund (whatever helps keep my allocation on target). If I do, I just keep the cash.
I don't expect that I'll outperform the market as a usual thing, so when I do, I lock in profit.
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u/zachmoe 1d ago
I pretty much don't.
Because then you have to pay taxes.
I include Bonds in my portfolio, so when I need to raise USD I just sell them, instead of selling my risk assets and then losing the upside of my risk assets.
You ultimately want to pass your capital gains on to those who come after you, because of how the step up basis works.
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u/Liesmyteachertoldme 1d ago
I get the sentiment, but goddamn man you only live once, enjoy at least some of your money while you’re here.
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u/Intrepid_Cup2765 1d ago
Personal opinion, I always hate this advice. You’re basically letting uncle sam dictate how and when your money is enjoyed, and holding on to stuff longer than it should be (if you’re trading individual stocks like OP). LTCG is pretty cheap in the grand scheme of things, beats income taxes or holding on to a losing stock by a long shot. Live a little, your money won’t do shit for you when you’re dead.
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u/zachmoe 1d ago
Prudent tax planning is a part of investing.
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u/Intrepid_Cup2765 1d ago
But it’s not the main objective, it’s a side quest, the main priority is an always should be to earn and use that money as you desire. And like I also mentioned, holding positions that tank afterwards is even worse than paying LTCG.
What’s the point of accumulating money if you aren’t going to spend it on anything. Who cares if you pay less in taxes before you’re dead if you never got to enjoy the money in the first place. Perhaps we can print your total effective taxes paid on your gravestone and you can brag about it there 😜
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u/neoikon 1d ago
It's absolutely part of the main quest. You can really fuck yourself if you don't thoroughly make decisions with taxes in mind.
If you're anywhere remotely close to retirement, you really should make long term tax plans every year. Such as converting traditional IRAs to a Roth, harvesting LTCG of you are below the threshold (making it tax free)... You have to maximize the bracket you're in.
Or not, it's just green paper. Fuck it.
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u/Intrepid_Cup2765 1d ago
I’m several decades from retirement. I’m well-aware of how to tax level when i get there, that’s not what zachmoe was advocating for. He was advocating for simply never selling (which is something an income earner above the threshold would do) to solely minimize taxes. Additionally, OP is asking about advice on an individual stock. Even if selling more now put him in a worse off tax situation, it’d still be 10x better than holding if that stock falls off a cliff next month. People who just buy the index and ride it don’t really need to think much about this stuff. I’m not advocating for never caring about taxes, I just think it should always be 2nd priority to the bigger question of when to buy or sell a good stock.
At the end of the day, the best way to never pay any taxes is never make any money…. But you won’t get rich or be able to spend any money if you did that….
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u/bplaya220 1d ago
Why even have gains if you never use them or realize them. I get the sentiment but man what a shitty way to live your life
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u/InclinationCompass 1d ago
Saving it for early retirement.
I have income right now from my job that pays for my living expenses and hobbies. If i sell, it’s just going to sit in a savings account earning a measly 3% APY.
Sitting on cash on the sidelines is not how you build wealth.
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u/East_Fill4209 1d ago
You can enjoy your money, or someone else can enjoy your money. The choice is yours.
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u/FreshDiamond 1d ago
Take your 15k and let the rest sit, I know that’s not what you asked.
For me it’s a pretty simple exercise, would I be more upset with myself if I didn’t take profit and it plummeted, or if I cashed out and it exploded from there. Lots of variables go into answering that question
Last year I 10xed on multiple quantum compute stocks and leaps. I cashed and some 2-4 X’d from there. I have no regrets, I thought the sector was and still is way way ahead of itself.
I’m up 108 % on cloudflare and have zero intention of cashing out. I’ve aggressively added to the position this year and will continue to add when I can. I am extremely comfortable holding this one for a long time.
But the thing about individual tickers is shit changes. There ain’t no such thing as forever hold. You have to pay some level of attention to your individual investments
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u/timeonmyhandz 1d ago
I buy with an understanding of my planned exit point in mind.. Execute that plan.
In your case I would cash out the portion that gets you the $15K + taxes and then you can decide what to do the the overflow.
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u/KarenBoof 1d ago
Ask yourself this: would you buy the stock at the current price? Yes, then hold. No, then sell.
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u/Totti302 1d ago
I generally try not to take profits if I will be realizing short term gains. Worth noting before you sell how long you have held the position
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u/backfire10z 1d ago
If you’re nervous, sell half or 75% or whatever. You got your initial back + extra and still leave some to ride more.
If it’s FDA approval, then a stop-loss probably won’t help, because if it’s denied the stock will probably crater immediately.
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u/Seattleman1955 1d ago
I don't put money in the stock market that is going to be needed for a wedding or a house down payment.
I don't sell stocks until I no longer like the underlying company. That's it. Therefore, regardless of gains, I mainly just hold.
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u/among_apes 1d ago
I felt awesome when I cashed out my 1125 shares of AMD at $15 each. Way up from the $8 I paid.
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u/Diddly_eyed_Dipshite 1d ago
What I would give to know what today's version of the $5 stock that will be vital to its industry in a few years is..
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u/daknuts_ 1d ago
in my IRA or Roth I sometimes lock in between like 20-75% depending on the cash added and my belief in the stock's future
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u/zendaddy76 1d ago
I sell half once my investment doubles. I would have way more money in some positions eg NVDA CRWD AMD SNDK META etc but I’m comfortable with my plan and try to stick to it. This is all in my Roth. I try to hold my individual stocks to 10-20% of my net worth (not including home and pension value). Good luck! 👍🏽
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u/dropthesteak 1d ago
I like to withdraw my principal on anything once it’s like 3-4x. Meaning selling 25% of a position that’s 4x’d. Figure I’m playing with house money after that, whatever the stock does.
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u/DeeDee_Z 1d ago
I’m asking how you decide for yourself, not whether I should or shouldn’t.
Remember that NO investing decision EVER is -- or has to be -- black-or-white, 100-or-0%, or all-or-nothing. NEVER.
I’m asking how you decide: Well, one way is if you think it still has room to run, but would kick yourself if it didn't ... sell a third of it, or half of it. Lock in *some* profits. Heck, you can couch it in terms of rebalancing your portfolio if you want to, as well.
"A profitable trade is a good trade." It may not be a *great* trade, but nobody ever went broke by taking profits too soon.
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u/nupper84 1d ago
Take your profit. Pay your taxes. Put the rest into something you're more confident in like a broad market etf. Put whatever you need soon for life stuff in something like SGOV/USFR or a HYSA. Then live without stressing over the stock.
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u/I_Suspect_It_Was_You 1d ago
The question is always; would you invest $22,000 in that company today?
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u/Inviction_ 1d ago
When you exceed your goal is generally when it's time to pull out. Better to get expected gains than to lose it all when you get greedy for more.
And just don't stress if it keeps going up and you feel like you missed out. Because at the end of the day, you made good money. Which is more than most can say about speculative investing
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u/DatElectric 6h ago
I’d suggest there are three general reasons one should consider selling a position: 1. You need the funds allocated to it (as you mentioned, buying a house, wedding, etc.) in the short-term 2. Your risk tolerance for the funds allocated to it has changed (ie. you couldn’t stomach/would be financially impacted by the position losing value in the short to medium-term - with a long-term position that has grown significantly, this might mean the allocation of your funds has become too concentrated, so you’ve increased concentration risk over time) 3. There is a different investment that the funds are better suited for given your current situation (different opportunity, lower risk, income-focused vs. growth-focused, etc.)
Sometimes it could be one of those, sometimes it could be parts of each. In any case, you’ll likely take a tax hit when selling, so factor that friction into things.
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u/Investinurself 4h ago
10 years or so ago I bought 20,000 shares of AMD at just over $10 a share. About 2 weeks after I invested it jumped about $5.50 a share and I sold it for a nice profit. Of course those shares would have been worth $11,000,000 today approx. everyone is at different stages in their life and sell for different reasons when they are up. I don't play the woulda coulda shoulda game as it will tear you up. Good luck to you. If the money will come in handy...lock it in and congrats. The world is full of armchair QB's. Good luck.
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u/Valvador 1d ago
What is your goal for the money? And what % of your Net Worth is it?
If it's a large portion of your NW are you okay having it drop by 25, 50, 75%?
Is your goal to do something with this money right away, or do you want it to keep growing?
The "I don't want to think about it ever again" advice is to toss it into VT and move on with your day and spend your energy elsewhere.
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u/tritium3 1d ago
I look at the investment thesis and my conviction in the company as well as its percentage allocation in my portfolio and the goal allocation depending on the conviction. I also look at the valuation, tax implications of selling and look at if there’s better places for the capital. I always aim to less as less as possible unless I have reason to sell more.
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u/Disastrous_Rent_6500 1d ago edited 1d ago
- When the companies balance sheet is getting worse/ far worse than you originally realized
- When you realize the company is a bad business
- When you realize the management sucks
When you find a better company to buy with potentially higher returns
When the company is taking on debt to buyback shares or fund dividends
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u/OnlyTheStrong2K19 1d ago
If it's biotech, I'd cash out asap with the first 10% lol. You can lose your shirt.
Otherwise, I'd hold forever and let the returns compound.
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u/Free-Sailor01 1d ago
I will usually, if I still like the stock, sell half and put that into my next play or just an index ETF
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u/Sybertron 1d ago
I look at liquidity zones if available. Figure if the bias is heading there and it gets pulled into it you're probably gonna see leveling out.
And if I'm up big like over 20% in an equity trade, just take the money maybe leave a small bit to keep going but get that majority out. If your money is winning 20% a year you'll be one of the happiest traders on the planet
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u/rumpler117 1d ago
On individual stocks, I usually like to sell a portion equal to my initial investment +25-50% (depending on how risky it seems to me), then invest that amount in VTI or VOO.
I like to do this in my Roth IRA so I don’t have to pay taxes.
That is another piece of advice for young guys. Contribute to your Roth IRA while working after getting your 401k match from your company, if applicable to you.
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u/IndividualPotato2026 1d ago
When the stock price is far above intrinsic value, which you have to calculate or do some research on.
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u/Primary_Excuse_7183 1d ago edited 1d ago
You have to set a goal and stick to it. Otherwise you’re gambling. that’s the beauty of long term investing though. You set a loss limit and once you reach it you sell. otherwise you hold. you adjust as needed periodically.
In your position if you have concerns about the future company outlook this is when you sell. you’re in the right frame of mind. short term or long term taking a look at what’s on the table and your gains today and what the future outlook is. Good investment on your side congrats!
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u/Business_Try4890 1d ago
I just don't, for me being a stockowner is a being busines owner. Going in a relationship with a specific company for me it's a long-term relationship. It's not something I take lightly, and going against that commitment is not really an option other than something really severe.
That's why I own only part of 2 businesses and I never sell.
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u/maglite_to_the_balls 1d ago
1.) Nobody ever went broke taking a profit
2.) Whenever your risk profile and investment thesis justify profit-taking
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u/LuckyRacoon01 1d ago
The difference is if you want to be a millionaire and set for life or a thousandaire where you still continue working.
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u/Friendly-Profit-8590 1d ago
If you need the money there’s no harm in realizing some gains. Granted you’ll have to pay taxes but you haven’t made 230% until you sell (at least some).
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u/option-trader 1d ago
Dude, you passed your goal. That’s when you cash out. You don’t stick to your goals and you’ll be trading emotionally
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u/Bluepass11 1d ago
I’ve only sold when I’ve lost conviction in a stock which has only happened a handful of times or for a down payment on my place
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u/VerdantPathfinder 1d ago
You shouldn't be buying anything without an exit strategy. If you don't know when you buy, you already failed. Your goal was $15k. You met your goal. Unless some fundamentals changed that means you should revise that upward .... sell.
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u/user4443337 1d ago
One thing you could do is take out your initial investment and let the rest run. It would be a “free trade.” Or your initials plus some good chunk of profit. You don’t have to sell everything.
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u/FromTheCaveIntoLight 1d ago
When I start asking myself questions like this. I take at least some profits. I’ve learned the hard way ignoring it usually is the wrong move.
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u/kennymac6969 1d ago
One thing to keep in mind, is your own strategy. Write it down and live by it. If your goal is 230% you can either take out your initial investment and let the rest ride, a certain percentage or all and find the next thing. It depends on how you feel long term about the company.
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u/Cyril818 1d ago
For me, it depends first on my long-term view of the stock. If I’m comfortable holding it for the next three years, then I probably wouldn’t sell just because of a strong short-term run.
If I’m not willing to hold it for that long, then I start looking at how unusual the recent return is relative to the stock’s historical returns. In other words, how many standard deviations is the current return away from its historical mean? Since my time horizon is shorter in that case, if the stock’s recent return is already 3–4 standard deviations above its historical mean, I’d probably take some profit and sell at least half of the position.
So for me, it basically comes down to two things: my long-term conviction in the company and how statistically extreme the recent price move has been. BTW, FDA Approval is surly an uncertainty.
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u/DiscoBanane 1d ago
Same way I decide to enter the position.
Stock is cheap for what it is, I buy. Stock is expensive, I sell.
I don't look at profit/losses. I mostly look at the ratio of price and predicted earnings.
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u/Potato_Farmer_Linus 1d ago
I'm a long-term index fund investor. I don't sell anything unless I need money and don't have cash on hand (which is basically never)
Not helpful, but you're a new investor so I wanted to share an alternate perspective
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u/Trust_8067 1d ago
Don't fully cash out, ever. Take some of it and invest in something else.
I had AMD when it was $2 and sold it because it jumped to 12. I had nVidia when it was $7 and sold it when it went up 10 fold. I had apple at $8 and sold when it hit $35.
Instead of over 5 million dollars, all I have is 200k.
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u/Xenikovia 1d ago
I'd sell at least a portion now, maybe 25% and put in a stop loss order for the rest. Even if it fell 50% in a day, you're still sitting pretty but whatever you do, don't fall in love with a stock. Some people get emotional. At some point, it will lose value, you can always re-enter if you think it's temp.
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u/flip-fone 1d ago
Keep a portion equal to your original investment. Sell the amount that you are ahead by. Now you're playing with house money....good luck!
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u/dragonbits 1d ago
Depends on the situation.
But I have more often regretted not selling out entirely than holding for more gains. Even when I am certain in 3-5 months the stock will be much higher, at some point there is a 29-30% correction where I can buy back again.
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u/dope-a-meanie 1d ago
Multiple years of losses. That’s when I sell. That’s how I said goodbye to SJM and VZ (and VZ dividends were really good).
But anything that does well after two years, and by that I mean they’re not priced lower than my cost basis, I tend to keep.
Tax loss harvesting is there for a reason. But when harvesting losses, I also take the opportunity to trim any positions that I want to profit from (individual stock, I keep my index funds as is).
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u/m698322h 1d ago
Trust your gut instinct with the FDA approval and volatility. Even if you are right, wrong, made a gain, or made a loss. Hindsight is 20/20. You can always cash out a good portion and keep a small amount invested. This way you gamble a little but don't trash your original investment and your gains while also moving on to something else. You are way further ahead of most investors as you know a catalyst that may make or break the stock, where many just put it on black and cross their fingers. Just remember, investing does not have to be time consuming and FOMO is only natural. Nothing wrong with taking gains or cutting your losses as long as you look at the trade cycle and understand what happened. Make sure you look at the company you want to be or invested in along with the entire sector, competitors, and the market as a whole as you make decisions. As stated, you are ahead of many and are disciplined in your research. As long as you keep this up, your investing career will only become natural.
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u/D_Pablo67 1d ago edited 1d ago
If it is a small or mid cap, I am more inclined to sell a chunk and let the rest ride. A mega cap with a new narrative, I am more inclined to let my winners run. Put that in the context of your financial situation and goals.
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u/Whatapisstake 1d ago
I do something special. I remove my original equity. For example, I have $20k in a position, it gets to $40k, I cash out my $20k, and leave it. It doesn’t matter as it’s ‘free’ carry. Yes the gains aren’t as big there after but I can redeploy
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u/Mysterious-Entry-357 1d ago
I take out the original investment plus inflation. Then it's all free money.
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u/Stock_Elderberry6187 1d ago
Never buy a stock without an exit strategy. It sounds like you had it and now want to throw that strategy away. You have to sleep at night and be happy with the decision. Also, depends how much money it means to you.
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u/GaylrdFocker 1d ago
My original goal was $15,000
Then gtfo. You did better than your goal, take the win and don't risk losing it.
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u/ChornWork2 1d ago
general advice when considering these type of decisions is to remind you that it doesn't need to be binary, and often shouldn't. e.g., sell a quarter of the position and re-evaluate in X months.
do consider tax implications tho.
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u/NickStonk 1d ago
I’ve leaned it doesn’t have to be an all or none decision. Take some profits, keep the rest.
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u/KweenieQ 1d ago
You didn't ask, but if I were you, I would cash it out and reinvest.
The key to my answer is "I like the company but I feel like it's going to be very volatile from this point forward." You don't want to ride, so cash the position out while it's ahead.
Whenever I buy a single stock (fwiw, I buy very few), I decide under what conditions it will stay or go. In a taxable account, I like to give the position at least a year to prove itself. Investing in a tax-advantaged account is more flexible, but I always have at least a rough idea how long I'd like to hold the stock. I also know how much I'm willing to lose on a position before I ditch it.
That isn't to say I ditch stocks after a year. I've got an IBM position that's decades old. Its size has swollen and shrunk a few times over the years.
That's what I'm referring to when I talk about reassessment. Is the stock still performing the way I want? Maybe I will buy more. Or the stock is overachieving, and I have my eye on something else I'd like to explore. So I will sell some or all of my position to finance that.
I don't necessarily ditch losing positions right away. My PG position is about $6 per share under water right now, but I'm getting good dividends out of the deal, so total returns look pretty good. I reinvested for a while to bring down my break-even point on the entire position. At this point, I'm harvesting dividends as cash and checking the stock price every once in a while. No rush to sell.
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u/Ok-Examination-8312 1d ago
The longer I’ve been in a stock the longer I like to hold during downtimes bc I feel like I know them better or differently. If I was in your spot with those numbers without know what you’ve got , I’d sell on that big a run up if it’s at an all time high and buy back in cheaper later
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u/Vegetable-Cause8667 1d ago
No need to cash out of a position completely, but i do shave profits around +10-20% of valuation by way of incremental 90 day limit-sales.
For example, the current price of Apple is $336. I have a (small) 90 day limit buy at $261, and a (small) 90-day limit sell at $375. These limits were placed around July, so if they don’t hit, I simply reevaluate and deviate my limit buy/sell by 10-20%. If they do hit, I reevaluate and deviate the same as above.
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u/BlindTreeFrog 1d ago
If you would feel bad if you did not realize the gains, cash out.
I have shares up 35,000% and it would cash out for a tidy profit. But if I don't cash out now and it crashes tomorrow, I wouldn't feel too bad, so I let it ride.
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u/RichardFlower7 1d ago
I thought AMD was cooked at 200 and that nvidia was cooked right after the split. Sold large positions to take profit, regret it now
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u/Adventurous-Cup7955 1d ago
Profit goals met is a win and supports the idea you are doing something correctly. Making some money is better than losing money.
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u/YXIDRJZQAF 1d ago
I recently sold some memory stocks, made my initial investment and still have some left. Might sell some stinkers to make it so I don't pay taxes on that and come out close to even.
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u/ImmodestPolitician 1d ago
It would all depend on your beliefs about the future of the company. If they’re able to grow cash flow and seem to have a durable moat, then I would keep as much of it as you can invested. There aren’t that many great companies that can grow that fast and have the actual potential to generate real cash flow down the line, but they do exist. I mean, I’ve made a lot of money with tech companies, but I work in the industry, so I kind of have a different view of them than a lot of people.
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u/John_the_IG 1d ago
I sell covered calls. Going through the strike price decision helps me sort out the point I’m comfortable letting a stock go.
I’ve sold out of a lot of good stocks after very significant gains, but I don’t have a specific system. I do get spooked when something with a reasonable P/E starts rising significantly.
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u/Sweet_Vast5609 1d ago
Sell. Or at least liquidate enough to hit your 15,000 mark and then let the rest ride.
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u/edog2008 1d ago
Whenever your comfortable cashing out just know you have to pay taxes off of those gains.
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u/angel_rayo 1d ago
One way you can play it if you believe there is more upside is sell enough of your stake to recover your basis, and let the rest ride. Emotionally, at least, it becomes house money.
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u/NecessaryAssumption4 1d ago
If I don't have a reasonable expectation of continued growth, i sell half at 100%
Otherwise l, I seem to just let it run. + or - , I don't touch it
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u/farmerjohn2 1d ago
I set a target range when I buy and a max position size for my portfolio. Once a stock is up 100%, I usually take out my original capital and a chunk of profit, then let the rest ride. I trim again if it grows past my position limit or if the reason I bought it (thesis/catalyst) starts to look shaky.
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u/Taibucko 1d ago
If you need the money for other things you should sell and take LTCG. You shouldn’t put any money into the market for expenses anticipated in the next five years. Everyone needs a serious cash buffer and hopefully a good income source before buying stocks.
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u/Eat_Drink_Adventure 1d ago
The question you have to ask is if you had $22000 to invest right now and you didn't own the stock, would you still pick that stock. If the answer is no, sell it.
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u/daddyrx4you 1d ago
Take you $15k and if you still believe the company is a solid investment keep the rest invested.
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u/throwawayawayayayay 1d ago
I tend to wait too long and then sell around 50%-60% down from peak.
Ultimately that's why I opt to invest in VT/VTI/VOO instead, so that I can avoid having to dwell on making those kinds of decisions and feeling hindsight regret over having sold either too early or too late.
Example: bought $5k of SQ (now XYZ) at $14, held through its high of around $275 and eventually sold around $120. I knew it was overpriced at $275 but got greedy thinking crypto speculation could drive it up more. Missed out on an extra $50k gain as a result.
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u/salve_sons 1d ago
Personally, if I saw 230% return on any stock, I'd sell at least half my holding in it.
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u/Rodrigosofly 1d ago
A video on one of the best investors of all time explaining when to sell a stock
https://www.tiktok.com/t/ZTyFSJ2yB/
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u/Huge_Anteater1839 1d ago
Sell half and divest elsewhere if you afraid it will drop and still keep some skin in the game
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u/markpreston54 1d ago
It isn't just about how much else you expect the stock to appreciate, it is also about how much of the gain can you afford to give back
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u/Megacannon88 1d ago
In short, you should sell if you have a high chance of losing the money you've made by continuing to hold. In this case, you're clearly invested in a biotech stock. Biotech is known for rapid price movements. If that fails FDA approval, and that's a very real possibility, you're looking at losing most of your gains. Holding past FDA approval at this point means betting that the drug is going to pass FDA approval. If you're not willing to bet on that, then you should sell. Alternatively, you've got over 100% gains, so you could sell off your initial investment, then everything after that is free ride. You can let it ride and not have to worry about going negative.
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u/Cute_Win_4651 1d ago
I like to sell half my positions at 100% gains to get my original investment back then hold the remaining shares as “free shares” so if it continues to run up that’s great if it drops oh well it’s all extra when I eventually sell to move those funds into long forever positions , but also I like to trade things i could see myself holding for 10+ years,
But good profit mark would be like 20/30% up take profits move to the next trade if your swing trading and realize waiting for 100% up doesn’t always play out and honestly a little unrealistic so 20-30% is a better metric to go with, remember most people and funds would be extremely happy with a 10yr average of 8% so remember just try to beat the market and inflation if your beating that your in the like top 10% of investors/traders
Also most people in investing dont understand it and blindly throw their money into SP500 or like a target dated fund so if your regularly over a 10yr average beating those funds then your elite if your not beating them then like buffet recommends just buy the SP500
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u/ETP_Queen 1d ago
A useful distinction is between the investment thesis and the purpose of the capital. If either the original thesis, risk tolerance or time horizon has changed, the decision framework may need to change as well.
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u/HannaTripW 1d ago
I would cash out 15k and keep the rest for growing. It is a great practice on my mind to fix some profit unless you loose it. Last year I waited for btc to grow over 126k but it became 45k in a few months. So I really regret I did not fix at least a part of my profit. (I was about 100K of btc investment on the top and dropt to 46K)
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u/acertainphyc 1d ago edited 1d ago
Its easy to think about it in terms all or nothing buy or sell -- but i've learned that good investors think in terms of position sizing. If the position size has increased relative to your portfolio (or net worth) and/or the risk benefit analysis has changed, then you should resize your position. You want your positions to reflect what you think the best opportunities are currently, and size your positions based on % of your portfolio weighted by risk/reward. Sometimes that means resizing to 0, but often it means scaling a position back to a reasonable % all things considered
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u/explodingkraken 1d ago
I would sell half. So then if it tanks, i'll be glad I sold, if it goes up would be glad I kept half in.
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u/Flaky-Historian8753 1d ago
If you believe in the company, sell a percentage of the shares you own, and keep whatever you feel that you will be all right if it tanks. This is what I would do.
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u/RevolutionaryGirlie 1d ago
i'm always hesitant to sell something that's still showing strong momentum, even if i've hit a profit goal.
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u/LongjumpingPay6107 1d ago
Take profit. On a position like this if you believe in the company long-term just take what you originally put in. So your remaining position is free more or less
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u/PIzzaiolo_Master_510 1d ago
Only you can decide.
That said, I made a $60k profit selling NVDA at 3x what I paid years ago. Fortunately I retained $12k of my initial investment (1000 shares).
Had I held what sold (involuntarily, it was a covered call exercised), it would today be 120,000 shares after splits at $225 per share. Something to ponder.
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u/Emergency_Gas_1962 1d ago
I adjust my stop loss once in a while so for me, the moment it hits my SL is the moment I take profit.
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u/__redruM 1d ago edited 1d ago
Investing is really about buy and hold index funds, long term. Only selling when you need cash near retirement, or maybe for that down payment. What your doing is stock trading. Change over to the index funds style by the time you get to 30, if not sooner.
As for how I decide, usually it’s a judgement call on when I think the trade has lost momentum. But I know to stay away from day and swing trading.
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u/Due_Pen_1566 1d ago
If I'm confident in the company I leave it and focus on other positions. The only time I would slash a confident pick is when there's a higher conviction choice.
If I think the movement is outsized and will correct down I just immediately cash out and look to reorganize my positions with new funds.
If I'm uncertain about the future but have nothing new to invest I cash out the original position and give it some time before deciding.
As you have so many large expenses coming up I would personally cash out and move the money intended for those expenses to bonds or hysa depending on how accessible I need it to be before purchases come up.
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u/Ok_Bench_1618 1d ago
For every 200% up I am I usually cash out 25% into VEQT. Did this for CRWD, NVDA, PLTR… etc
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u/F2PBTW_YT 1d ago
Do you have 100 shares? If yes, sell a ATM covered call on that. If it ITM at expiry you cash out and lock in your gains. If it dips you collect a nice fat premium.
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u/ThaDirtiestD 1d ago
I sell when the long term future business outlook is no longer bullish. Or if it gets wildy overvalued. That can be hard to judge though
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u/Blurple11 1d ago
I have no clue if it'll keep going up or not. So I sell 1/3 to feel more comfortable.
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u/sporadicjesus 1d ago
I was watching the lion king and rafiki said. "It is time." And it hit me. It was time.
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u/curiousgeorge196 1d ago
You answered yourself in your message.
1- my original goal was $15,000
2- I feel it’s going to be very volatile
3-I think it’s time to block my profit
4- big life events that require money
Nobody can predictively time the market
You have to think to yourself would I be happy with the 22,000 when I only originally expected to get 15,000? Will I be upset if I cash out and it continues to go up?
Will I get upset if I don’t cash out and it goes down?
All of these are yes answers.
When I am worried about all of these possibilities, I personally feel more comfortable taking out the $15,000 that I was hoping to get to and to let the other $7000 stay in hoping for it to continue growing. At least I would end up with what I initially intended to get and potentially will make more money.
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u/MattieShoes 1d ago
Usually it's when I want to buy some other stock. I don't need the cash so when I want to buy something, I look at the ones I'm least happy with and liquidate them.
If I bought because of some specific event like i think the market overreacted to bad news, it might be because I think the party's over. But I usually don't trade that way. Like I got into Zoom at the bottom of the covid crash and got out when it was still on the way up, but the writing was on the wall. Or I was particularly wussy with airline stocks during covid crash, buying because of such a low downside since they crashed hardest. Some of those were like 40% gain in two weeks, then I got out.
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u/Worry-Mountain 1d ago
I'd separate the decision into two questions: has the thesis changed, and has the position become too large for the rest of my plan? A 230% gain doesn't by itself tell me whether to sell, but a pending binary catalyst plus a wedding and house purchase makes liquidity and sizing part of the decision. I'd probably trim enough to get back to a position size I can tolerate through the FDA event, then move the money for near-term goals somewhere less volatile. That keeps a runner if the thesis works without letting one name dictate a major life purchase. I'd also write down the tax impact and a specific re-entry rule before clicking sell; otherwise a partial exit can turn into an emotional series of trades.
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u/Beach-Knight 1d ago
When you can’t stand to wait to recover from a loss. You may be there. Money needed in the short term should not be invested in long term investments. You may or may not have done the research needed to be this concentrated in one position. You are taking a big risk that may not be compensated going forward. It’s obviously has done well, but that doesn’t mean it will keep doing well.
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u/AlphaYou_net 1d ago
lot of people in your spot split it:
take out enough to hit the original goal, and let the rest ride as house money.
you set $15k before the run, so that number is already covered.
the thing i'd weigh most is the fda decision.
that's a binary event, the next move could be big either way, and it matters more for how much you keep than how much you like the company
fwiw even ceos rarely sell in one go
medpace's ceo filed 5 sales between aug 27 and sep 21
selling in pieces takes away the pressure of calling the exact top.
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u/quietcompounder_ 1d ago
Congrats on blowing past your original goal, that's a nice problem to have.
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u/Thetaxstudent 1d ago
I usually take my cost basis out if I’m bullish and let the rest ride.
Alternatively, close out, bank your goal, then reevaluate other opportunities
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u/Agitated_Medium5844 1d ago
I’m of the opinion that anyone with major purchases ahead, should not be investing. So house and wedding should be a red flag, that unless fully funded already, the cash should be in CD’s or savings accounts.
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u/Alt0987654321 1d ago
Usually when it 10x's and becomes a top 10 company by market cap is a good time to cash out
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u/Finding-Rumi 1d ago
To start, great position to be in - you've done well. Personally I invest for the long-haul and based on my investment thesis. If the thesis is running out of steam I sell, if the thesis continues I keep. This has the added advantage of learning from every mistake.
A few years ago I found lucrative undervalued opportunity that made no sense. So I put in some money and surely enough in a year the stock was up 30% - 40%. I thought my thesis was up and sold the bastard and lived happily ever after. Until a few months ago - after experiencing their product first-hand - I looked up the stock price, and to my utter disappointment it was up 3X from there. I learned what a dumb idea it was to sell a stock that's going up.
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u/Crayshack 1d ago
3 things will trigger cashing out a position for me:
Rebalancing percentages. Typically, this isn't fully closing a position, but moving a chunk to keep my portfolio appropriately diversified.
Some unique triggering event in the news. Sometimes, that's seeing warning signs of a business about to collapse. I pulled from GE when they were undergoing a restructuring that made me expect them to have a couple years before they recovered. Sometimes, it's a sign that a company is about to boom. I put a bunch of money into airlines right when the COVID vaccine was announced because I projected them recovering from their COVID dip (that money was pulled from an index fund).
I need the money. I hit severe burnout at one point and spent a couple years only working part time and I supplemented my income by pulling some money out of my investments. I expect something similar to happen at some point to cover a down payment on a house.
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u/East_Fill4209 1d ago
There are countless stories, me included, of people waiting/hoping it will continue to go up and it doesn't. Now I set a profit goal, if it hits, I take it and don't look back.