Tuesday, November 21, 2006

How to sell a stock?

I had this conversation with a coworker, who actually wrote into Money Magazine and was published. When do you sell a stock? The price could be hovering at an all time low or the lowest of the year. It could be beaten down into submission with analysts saying what a great buy. Thus buying a stock seems substantially easier than selling, because greed sets in.

Do you set a sale price and stick with it? And if you do, what happens if it goes up another 205 do you cry over missing the growth? Or do you sell when you see the momentum slipping and the stock dropping? And hope you've already made a tidy profit to ride out the drop. Do you buy for the long term or ride short term bubbles?

How do you know when you are satisfied with the money you've made with a stock? Currently we're still sitting on the company ESPP and it's made a 50% increase since the purchase price. It appears to still be going up and we are not yet sure we should sell. It's greed talking, fear of missing the high. It's also faith that what we're doing is good and everyone is acknowledging it, so the price should go up.

But when do we tally our wins and losses and run?

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