Look In the mirror- do you see a professional investor staring back at you? I certainly experienced many trading ups and downs.
I would like to start out by referencing my friend/associate and one of the smartest people in the business, Bob Moriarty of 321Gold.com from his insightful investing book CLICK HERE: “NOBODY KNOWS ANYTHING“. This book has helped a lot of investors make sense of the markets and has gotten great reviews.
As Bob notes “If you don’t take a profit when you can, you are going to take a loss when you have to. It’s the only alternative to taking a profit.”
As Bob also very astutely notes after helping someone to win a jackpot at a casino, “to keep the money, you now have to stop playing”. We are not saying that you have to stop playing in the stock market as this is not the same as playing the slots.
However it may be prudent to take some of your winnings off of the table! As Bob also says, “The behavior of people runs in cycles.”
Another point he makes is that there are no experts but there is a wise way to invest and a wise way to handle and keep your profits once they occur! We will attempt to explain.
They say it is easy to buy shares in a company but much more difficult to sell and most people can attest to this being a true statement. For some reason, the pride of ownership gets in our brain pathways and can short circuit our logic!
This is added to the fact that nowadays there is an endless amount of conflicting advice constantly bombarded upon us from all sides – such as: buy and hold, follow the fundamentals, follow the technicals, use a combination of both, find a guru, don’t follow gurus, play it safe with a bank, you have to take risks to make money, invest like an algorithmic computer program, farmers are best at commodities…it is endless!
So what is a logical way to approach taking a profit?
Well it may be boring but in a bull market for juniors such as we are experiencing again (finally!) – it may be a wonderful idea to get your original investment back and subsequently let your profits ride since nothing goes up forever and in a straight line. This takes the stress out of the situation. (Note: we are NOT investment advisors, nor do we profess to be. You should consult your financial advisor).
A lot of professionals will give you the advice to sell half when it doubles and let the rest ride. Great advice we can all generally agree on. Bob notes in his book “a reasonable plan to profit might be to sell 33% of your shares when you have a double, sell another 33% of the remainder when it doubles again, and further 33 per cent every time it goes up another 100 per cent. That way you get most of your investment back in cash early on but keep benefiting if it goes up.”
With that method of selling you can ride your positions in comfort not feeling left out if it goes ‘to the moon’ and not hating yourself if the company reports negative news or a market crash occurs. Your money is doing it’s job and you have created options for yourself along the way. Priceless.
Everyone has different objectives and a risk tolerance.
Bob Moriarty in his Gold Report Article talks about how he recently made some good gains in MGX Minerals shares:
“Let’s call the shares cheap on the 19th of January at $0.69. After all, we have the benefit of hindsight and now we know it went almost 300% higher in seven trading days. So again with the benefit of hindsight we know $2.75 was not cheap, it was dear. So I sold. Naturally like most people, I am incapable of picking the very top. I sold for $2.35 for a gross profit ignoring commissions of $1.40 a share in ten days on a $0.95 investment. I missed the top by minutes but made a nice profit.”
I certainly wish I was as smart to trade that well – Bob’s book is certainly helping.
MGX Minerals, Keek and MX Gold are just a few stocks of MANY that have recently been on a roller coaster ride in terms of their share price -trending upwards but dipping along the way. No one can accurately predict the highs and the lows – but the prudent ‘investor’ knows a good company, follows it and rides out the waves. If there are red flags he/she may sell. It is always good to stay on top of your investments and follow your investments intently.
As many have noted including our friend Mr. Moriarty, “Nobody ever went broke taking a profit.”
Dr. Kal KoTECHa
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