Every successful investment plan has an exit strategy. Knowing how to sell is arguably more important than knowing how to buy stocks. The below from the Investor’s Business Daily gives key points to think about when trying to protect your position from large losses.
* The first sell rule is to get rid of any stock that falls 8% below your purchase price.
* It’s critical to follow this loss-cutting rule regardless of how highly you value a stock. Personal opinions get in the way of smart selling decisions.
* The larger the loss, the higher the recovery you need to get back to the break-even level. (A 50% loss on a $100 stock, for example, requires a 100% gain to get back to $100.)
* Strong stocks sometimes initially retreat close to their buy point (as determined by the stock’s chart pattern). This doesn’t necessarily mean you have to sell, unless the stock goes 8% below the purchase price.
* Avoid making sell decisions based on tax concerns or commission rates.
For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436