I was told that I have to constantly sell my stock then reinvest it to "lock in" profits. Is this true?

I just don’t understand the purpose of selling and rebuying at same price point. That does absolutely zero % of impact.

If you had at start, they grow at same rate, you will still have same grown on end, but then scenario two is more to .

I’ll come back with a pretty picture soon to state my case… well… Ciaran’s case!

Well…what I think is Ciaran’s case!

This will always be more, but it’s a different situation than 200% on £100. Because you are doing 100% after 100% which is not 200% (it’s 300%, maths eh 🤦)

1 Like

What you’re missing in these two example is the stock price. It also depends on how you add up those percentages. To compare apples to apples, you should focus on the growth of the stock price rather then growth of the investment.

Let say, that the price grows 200% from the initial investment (there is a difference between 100% and THEN ANOTHER 100% -> 1\$22 = 4\$ or 200% 1\$*3 = 3\$)

Scenario 1: stock price 1\$ * 3 (200%) = 3\$

1. bought 100*1\$ = 100\$
2. at the end value of my investment is 100*3\$ = 300\$

Scenario 2: stock price 1\$ * 3 (200%) = 3\$

1. bought 100 shares*1\$ = 100\$ in value
2. then I decide to sell on 2\$ -> 200\$ cash
3. I buy 100 shares back 200\$/2\$ = 100 shares
4. price is up to 3\$, value of my investment is 300\$ just like in scenario 1

For me, the difference is just psychological

1 Like

the fun comparison:

scenario 1: 1 +1 +1 =3
scenario 2: (1 x2) x2 =4

5 Likes

I spend 15 minutes and 4 paragraphs explaining it, but this works just as fine

1 Like

Right, and this is precisely my point. It all comes down to whether a stock has legs to overperform in that way but what I’m saying is, using NIO as an example, if I sold my holding after my investment reached 100% and immediately put the full amount back into it and it gained another 100%, the end number is higher than had I just sat on it to let it run the full 200%.

I had assumed someone was comparing Nio to Tesla, now I know why for the record, Joey is assuming the the realised profits are the “full 200%” when in reality its more like 300%. either the stock goes up 200% or it goes up 300%, in both cases it doesn’t matter whether you realised or not. your final gains are the same.

1 Like

Now that doesn’t make any sense to me…

I’ll be back shortly.

I’m not crazy…!

1 Like

Well I ain’t saying you crazy, but err I still don’t get why selling is mentioned in scenario as only relevance is % performance of stock.

So basically we have parallel universe.

Universe 1 it runs 100% from initial X value ,then runs again 100% from Y value which is X +100%
Universe 2 it runs 200% from initial X value

Selling in either Universe doesn’t have any relevance, so I don’t understand why mention it.

2 Likes

Not sure I have had enough coffee to understand these posts fully haha

1 Like

I think you need more then coffee to fully understand the Author.

Ouch!

Okay try this - hope it clarifies;

So as not to incite a riot, let’s say the stock is BABA…

The stock price is different at the end

Exactly. So you’re getting 100% more growth in a bigger portion.

If it continues growing of course.

As denoted by the percentage changes

That still makes zero sense, not same universe.

Please elaborate, mate. My whole reason for starting this chat up again was to understand whether I’m misunderstanding and, if so, in what way.

Because the price of underlying asset is not identical.

In scenario 2 price increases on higher clip , thus the stock value is higher then in scenario 1.

Selling did 0 in the grand scheme.

1 Like