Sell The Losers And Let Your Winners Run!
This is one of the oldest sayings in the arena of stock market investing and it always makes abundantly good sense!
It's a prudent thing to do for any investor - to sell any stocks that are losing money. But just what constitutes a loser?...Is it when the price of a stock drops from its high?... Or is it when the current price of a stock you hold is below its purchase price?
You should be able to agree to the fact that any price drop is a losing situation because price drops cost an investor money.
The cause of any price correction determines whether a stock is still a winner. Is it caused by a weakness in the overall market?... Or daily fluctuations of the stock price?... Or long-term complications such as declining sales, tax difficulties, or legal problems?
Winners are the stocks of those companies showing consistent growth in sales revenues, earnings, and price. They are the leaders in their industry and have continued new product developments for new or existing markets.
Winners should be held until the fundamentals that make them winners begin to weaken, or until the price runs too far ahead of the earnings, causing a decline in value.
Stocks trade on the anticipation of future growth. At times, the anticipation vastly outpaces the growth and even the growth potential. Add the news of weaker earnings to that anticipation and the stock price gets hammered down hard.
Losers are taking money from the investor and should be sold and forgotten until such time as they stabilize and rebuild the fundamental strength necessary to be winners once again.
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It's a prudent thing to do for any investor - to sell any stocks that are losing money. But just what constitutes a loser?...Is it when the price of a stock drops from its high?... Or is it when the current price of a stock you hold is below its purchase price?
You should be able to agree to the fact that any price drop is a losing situation because price drops cost an investor money.
The cause of any price correction determines whether a stock is still a winner. Is it caused by a weakness in the overall market?... Or daily fluctuations of the stock price?... Or long-term complications such as declining sales, tax difficulties, or legal problems?
Winners are the stocks of those companies showing consistent growth in sales revenues, earnings, and price. They are the leaders in their industry and have continued new product developments for new or existing markets.
Winners should be held until the fundamentals that make them winners begin to weaken, or until the price runs too far ahead of the earnings, causing a decline in value.
Stocks trade on the anticipation of future growth. At times, the anticipation vastly outpaces the growth and even the growth potential. Add the news of weaker earnings to that anticipation and the stock price gets hammered down hard.
Losers are taking money from the investor and should be sold and forgotten until such time as they stabilize and rebuild the fundamental strength necessary to be winners once again.
* * * * *
posted by Bob Moser at
3:37 PM
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