When to sell stocks, shares, bitcoin... etc?

[London1986]

Hi there

Let's say you've held some stocks or shares, bitcoins, precious metals etc for a few months/years and they have done really well.

When or how do you 'bank' this profit?

I know a lot say it's best to simply buy and hold and then only sell if you need to release the money.

But my trouble with this is I would like more immediate returns (not wait 20+ years) and would also like to protect my money from a future dips.

Let's take Tesla shares for example. Let's say I bought some shares in December around £350 a share. Right now at this time of writing, they are worth around £760 a share. More than double. Tesla shares have gone through the roof this past month. What would I do here?

I'd like to realise some of this profit but wouldn't want to sell all my shares, so was thinking maybe sell 10-20% and leave 80-90% shares still in the market. What do others think of that strategy or is there a better way of realising some funds whilst still being part of the long term growth?

Look forward to hearing your responses.

[Kev_Mk3]

I'm new to this myself but I would have a broker sell the number of shares I wish to sell so that amount then returns leaving the remaining in the account. Usually a fee for this.

Example.............

I have a Halifax Share Trade account -

I have 1000 shares in Telsa. I want to sell 200 and keep the remaining in my account. The "trade" would be a one off charge of £12.50 for this and the funds are then sent to my nominated account.


This is my understanding but someone who knows more about this will answer more technically and more detail.

[LeoSayer]

Would you buy the shares again if you didn't hold them?

If not, then it's time to sell.

[London1986]

Thanks Kev, but that's not really what I meant. My question was why you decided to sell, now how.

LeoSayer said:

Would you buy the shares again if you didn't hold them?

If not, then it's time to sell.

Yes, potentially I would. But then I'm not talking about selling all the shares completely as I agree that wouldn't make sense if I were to only buy them again (at hopefully a lower cost, but unlikely).

My strategy would be to only slice off some of the top, bank some of the gains, and leave the bulk of my stocks in there to (hopefully) grow, and then repeat.

[NickCQ]

I think you need to answer fundamental questions about why you are investing and what you are trying to achieve.
Where are you on the spectrum between 'trading to make money' and 'putting away a nest egg to fund (early) retirement'

If it's just spare cash that you haven't quite decided what to do with, an offset mortgage account is probably a better risk profile as you don't have the uncertain drawdown risk.

[siovey]

I've had shares where I've been 400% up and ended selling at break even. I've also had shares that have doubled and i sold them. They have since gone from 10p to £25! Others I got bored of holding as they weren't doing much, checked them a few years later and they had gone from 20p to £70! In short, no one knows. Even the big boys screw it up at times. Going forward I'll be buying and holding rather than trading. Hopefully I'll get one properly right in the future!
Good luck!

[London1986]

siovey said:

I've had shares where I've been 400% up and ended selling at break even
Good luck!

This is what I'm talking about! Of course you don't have a time machine so will never know when something will peak but one strategy i've read is to set yourself a limit.

So in this case where a share goes up 400%, I was thinking you could do the following...

Option 1: Share goes up 100-200%. You sell 25% of your holdings. Share goes up another 100-200%. You sell another 25%. So you always bank returns by slicing off profits at the top but still keep a chunk invested for the long term. That way if there was a huge market correction and the stock drops back down, at least you have taken some chunks out of it.

Option 2: You do nothing like you did and lose out on those price gains.

I know the common consensus is to simply buy and hold, and not to try and 'beat the market'. Yet with this strategy, I'm not trying to beat the market and I am technically holding for the long term. I'm just trying to see if it's possible to do both.

[Benbay001]

You should sell when:

• The criteria that you bought on no longer exists, eg competitor enters market.
• The asset becomes over valued by the metrics that you based your buy decision upon.
• You spot a better opportunity to grow your money else where and need the money.

In my honest opinion, if you dont know when you should be selling, then you shouldnt be buying in the first place.

LeoSayer said:

Would you buy the shares again if you didn't hold them?

If not, then it's time to sell.

I would agree with this.

[devnull]

Benbay001 said:

You should sell when:

• The criteria that you bought on no longer exists, eg competitor enters market.
• The asset becomes over valued by the metrics that you based your buy decision upon.
• You spot a better opportunity to grow your money else where and need the money.

In my honest opinion, if you dont know when you should be selling, then you shouldnt be buying in the first place.

LeoSayer said:

Would you buy the shares again if you didn't hold them?

If not, then it's time to sell.

I would agree with this.

You also have to consider, rather like my position, is that you're tossed an amount of shares (RSUs) when you join an employer. They vest slowly over time, so gradually have an amount of money sitting in an account somewhere.

[London1986]

Benbay001 said:

You should sell when:

• The asset becomes over valued by the metrics that you based your buy decision upon.

So based on this reason to sell, let's take my earlier Tesla example.

Let's say I bought Telsa shares as above to hold for the long term. They've more than doubled in a month. I don't need a crystal ball to know this is a spike and the market will correct itself. The share price has simply risen too quickly for this type of stock. So as you say, here the asset has become overvalued. Yet I bought this Stock to hold for the long term.

So you would just ignore this freak increase in share price and not bank any of this gain?

[Benbay001]

Firstly Tesla's business model is too complex for me so havnt crunched numbers and the risk is unnecessary and too great for me.

Secondly, just because a stock price has doubled in a short space of time, doesnt mean its over valued. If you believe efficient market hypothesis, then the share price being what it is, is evidence that the price is correct.

If you dont believe in efficient market hypothesis and that the market can become highly irrational about a stock, then the price may still be significantly underpriced or it may now be correctly priced, or overpriced. Its for you to make that call.

Do i think that Tesla will be able to become the second largest car manufacturer anytime soon, as its market cap suggests? No.

[London1986]

Ok.

I was just using Tesla as an example. Could have used Bitcoin, or any other commodity.

I guess I am trying to blur the boundaries between investing and trading which is why I'm not getting a clear solution.

-

So general consensus seems to simply be buy and hold and ignore any spikes along the way.

[Kev_Mk3]

London1986 said:

Yes, potentially I would. But then I'm not talking about selling all the shares completely as I agree that wouldn't make sense if I were to only buy them again (at hopefully a lower cost, but unlikely).

My strategy would be to only slice off some of the top, bank some of the gains, and leave the bulk of my stocks in there to (hopefully) grow, and then repeat.

Sorry I misunderstood the question

[Benbay001]

London1986 said:

So general consensus seems to simply be buy and hold and ignore any spikes along the way.

If you have understood that from what i have typed, then you have misunderstood.

As Warren Buffett said "If you are not willing to own a stock for 10 years, do not even think about owning it for 10 minutes."

If the stock becomes over valued, then by all means sell it. Only you can answer the question of what is overvalued for Tesla.

As to your original question, for me this video sums it up perfectly https://www.youtube.com/watch?v=XN_0ipn_c1I&t=...

When to Sell a Stock | Phil Town

[London1986]

Benbay001 said:

If you have understood that from what i have typed, then you have misunderstood.

As Warren Buffett said "If you are not willing to own a stock for 10 years, do not even think about owning it for 10 minutes."

If the stock becomes over valued, then by all means sell it. Only you can answer the question of what is overvalued for Tesla.

As to your original question, for me this video sums it up perfectly https://www.youtube.com/watch?v=XN_0ipn_c1I&t=...

When to Sell a Stock | Phil Town

No that's not solely from what you've typed, it's the general view on this discussion. TBH your last post was deviating slightly, I'm not talking about the company value, whether it is overvalued or not.

I watched the Phil Town video and yes I don't disagree, but again, everyone speaks about when to sell your entire holdings. It's all very black and white, either hold or sell. Why can't you do both?

Why can you not sell a partial amount to recover initial invested capital (and a little bit of profit) and keep some for future growth. That way you can reinvest that money you pulled out whilst still staying in the stock.

By doing the above you reduce your exposure if the share price was to drop, plus it never hurts to take some profits at over 400%!!

This does of course reduce your overall shareholdings and I wouldn't do this frequently but to I can't see how it's a bad thing.

[anonymous-user]

Sell Bitcoin?

What!?!

HODL

;-)

[bp1]

London1986 said:

Why can you not sell a partial amount to recover initial invested capital (and a little bit of profit) and keep some for future growth. That way you can reinvest that money you pulled out whilst still staying in the stock.

Its what I do, but I am not a professional in this!

Eg I bought Boohoo at 66p a share, first time it hit 1.90 I sold enough to recover my initial investment, share price now 3.30 ish and happy to hold my existing stock as anything from is profit. I also set stop losses to protect the gain, currently my boohoo stop loss is at 2.40, so I know how much I get as a minimum except gaps down etc.

[NRS]

London1986 said:

siovey said:

I've had shares where I've been 400% up and ended selling at break even
Good luck!

This is what I'm talking about! Of course you don't have a time machine so will never know when something will peak but one strategy i've read is to set yourself a limit.

So in this case where a share goes up 400%, I was thinking you could do the following...

Option 1: Share goes up 100-200%. You sell 25% of your holdings. Share goes up another 100-200%. You sell another 25%. So you always bank returns by slicing off profits at the top but still keep a chunk invested for the long term. That way if there was a huge market correction and the stock drops back down, at least you have taken some chunks out of it.

Option 2: You do nothing like you did and lose out on those price gains.

I know the common consensus is to simply buy and hold, and not to try and 'beat the market'. Yet with this strategy, I'm not trying to beat the market and I am technically holding for the long term. I'm just trying to see if it's possible to do both.

What are you doing with your losses? If you let your losses go with 100% of your money then you will skew your investments against yourself, by say removing 50% of your good investment from actually being invested while taking full losses. That makes it more likely you lose money/reducing your performance.

[Simpo Two]

Hmm. Well, when you are buying, regular investments are often thought wise to take advantage of 'pound/cost averaging'.

So you could apply the same logic when selling. IE don't sell all in one lump - firstly you may get a CG hit; secondly you'll be annoyed if they carry on rising. So maybe sell in small regular chunks to hedge your bets, as it were.

[jeff m]

Trading or investing ????
If I am trading I know my sell price before I buy, and will very often place a sell order at the same time.

Investing, hopefully I have chosen something that will endure thru thick and thin, unless something changes I will probably add to it at opportune moments.

With regard to Tesla.....leave something for the next man!
Tesla is high because it is considered to be way out in front of the competition, should VW make some statement re it's own progress Tesla could correct.

Make your decisions based on fact, not greed