Locking in Profits

[cannew]

By selling a stock that has gone up in price you end up with a gain that can’t be taken away if the market drops.

But what do you do with those gains? If you re-invest the money are you not subject to the same possible loss if the market drops? The only way to lock in profits is to sell, pay the commission and taxes then keep the balance. The problem is you have now lost the income and potential future income the investment generates.

By selling and re-investing in a new stock you’ve occurred 2 commissions, will have to pay capital gains tax (in non-registered accounts) and must find a new stock(s) with as good or better income generating potential.

I prefer to hang on to my winners and let them continue generating higher and higher income.

[Kerim]

Agree. I think I'd only sell if things got wildly and obviously overvalued (except of course if the thesis for a stock changes, such as a dividend cut).

[Concasto]

While I have not been at this long, I plan on only rarely selling my stocks. If something gets what I consider overvalued I simply would not put more money into the company and at worst, turn off the DRIP. If it got so far overvalued that it was a no brainer even after paying capital gains tax, then I would consider it. This is of course in a taxable account. IRAs are a bit different.

[CritMass]

Had to sell some shares of my overweighted cash cow, SO, recently to pay for some major home renovation. Sold the shares at a high point about 2 or 3 weeks ago. Things worked out well for me, this time.

[Robandcindy2]

It's kind of amusing but the other night night Cramer closed a segment with "and remember, no one ever gets hurt taking a profit!"

I had to chew on that one a while.

I could certainly sell our $2000 gain in PG and "not get hurt"....other than forgoing the income PG has provided continuously for 57 years....

So then where are you?

The current list of Champions and Contenders did NOT cut their dividends during the recession/depression/crisis of 2007-09....

So I believe we will keep "taking our profits" quarterly(and a few, monthly).