What do you do when your stock shows a profit

đź’¬ Trading 212 chat
1

Hey T212 ers…. is that a thing?

I have a stock that has been down for the last 5 years, I have over 700,000 shares in them, at an average of 0.07 pence.

In the last few days, the company are finally in a pre production stage, and the shares are reflecting this and are now at 1.03 pence per share. Meaning I am up by circa ÂŁ2750. I could sell 200,000 odd shares and take this profit, leaving 500,000 odd.

I have not named the stock, as this is not a recommendation, I am asking, what would you do. Keep your full holding at 700,000 or take your profit, leaving fewer shares.

Hope this makes sense, I mainly invest in dividend paying shares, which I never sell. The above is a rare issue from one of the very few growth stocks I have.

2

Not sure if I’m losing my mind here, but I can’t figure out where the £2750 number comes from.

Your cost basis must be about ÂŁ500:

700,000 shares x 0.07p / 100 = ÂŁ490

You say the share price is now at 1.03p, so your position must now be worth about ÂŁ7,000:

700,000 shares x 1.03p / 100 = ÂŁ7210

That’s a profit of over £6,500 but you said you’re up by about £2750, which half the calculated profit. What am I missing here?

~

Moving onto your actual question - “what do you do when your stock shows a profit”. You have to ask yourself why this stock is suddenly up. Has the company announced some good news? Have they released a new product or announced a profitable year? This recent price increase could be a short-lived spike, and you should sell now, or it could be the beginning of a new uptrend, and you should continue to hold.

Another way to look at it is this: if you did not already have shares in this company, would you buy now? If the answer is No, you should seriously consider closing your position.

You mentioned that the company is now “finally in a pre production stage”. This sounds to me like the company will start making money in the next year or so, and investors are looking to get involved now, hence the share price increasing. This suggests that the share price could increase significantly over the next few years.

1 Like
3

Personally, I would sell sufficient shares to recover my initial investment, the remaining shares are pure profit going forward. If they do take a dive after your sale then you haven’t really lost anything.

4 Likes
4

I think you’re wise. After all, you have made no profit at all until you sell. I did the same recently with my Google stock: I sold half of them because the recent bull run and talk of a September market correction have me the jitters.

1 Like
5

.07 of a penny. So just over half pence per stock.

The figures I gave were rounded, as they are not the main point of my post, it’s more about taking the profit or waiting and seeing if they gain more I’m asking.

6

Thank you for the reply.

There’s always talk of a market correction, so take it with a careful pinch of salt. I’m convinced most of the trading news websites toss a coin as for what they think is going to happen, just for clicks.

Years of reading the same stuff over and over again, you soon realise no one knows and it’s all a calculated risk.

7

Yep, I was leaning towards this, but then, the current profit does not cover initial investment by about 50%, the stock is up 15% in today session, so I could reduce my investment outlay, and then if it drops, top it up again or if it continues to rise, sell more to fully cover my investment.

Now the other risk, they are talking of a possible dividend after 3 years of production, so.. wait it out for the dividend, as my holdings x proposed div, hello super yacht… or do the above.. lol

8

Oh no, the stock dropped a little this morning. That’s annoying.

9

FYI, I’ve not read anything but your original post. And I’ve slapped on a bunch of comments. If they miss the mark, feel free to ignore.

I, for one, stay away from companies that go from “0 to 50” then back down, meaning, this sort of picture:

image
image749Ă—464 4.18 KB

Because even when they pop, they get smacked back down very rappidly.
I know thos “little” moves can sometimes be 100% returns or higher, but it’s hard to hang onto these types of stocks, is what I’m saying.

Not sure if this is sort of the chart you’re looking at, but if it is, that’s my 2 cents.

I personally exit based on the chart: both how price moved recently + what’s to expect above. Meaning, if this stock’s been downtrending for 5 years, there could have been areas (don’t know your ticker, so can’t say for sure, but it’s likely that there were areas above) where people longed the stock, the stock dropped, now they’re stuck.

So as soon as the stock rallies, these guys are trigger happy and ready to sell against your long position.

So going long on these first breakouts can be troublesome, as you can’t tell whether price will start to rally, or if it just pops above then gets kocked down again.

I myself, wait for price to break out of this base, then take the next entry long. Now that I have confirmation, and now that (most of) those sellers are out, the only selling will come from people taking profit, which assuming is not excessive should allow the price to rally higher.

I wouldn’t blame you if once price reached an upper resistance after price bottoming for a while, you’d take some or your entire position off. Then wait to see if it can rally above the range or just wants to continue going sideways/nowhere.

After a stock’s fallen, and is now basing sideways, a lot of people just long the bottom & short the top, they may hold some shares in case of a breakout, but for the most part their take all target is the top of that range.

Hard to know if and when price will break out, hence I’d not buy within the range hoping it breaks out. You could be holding for years with no result.

But since you have a fundie perspective (I don’t spend a second on Fundamental Analysis) that can definitely give you (sometimes false) confidence that higher prices are to be expected soon - and if you believe in your fundamental analysis, then hold the stock, why sell? It’s only if you don’t trust your FA, or know that there’s little timing to be learned from FA, then you’d doubt your position, timing, sizing, etc.

Not sure how FA can help with these matters, but I wish you the best, I hope whichever decision you make, it pays off.

All the best, dude!

1 Like
10

Hey.

Thank you for the reply, the stock isn’t back at a loss and has stayed in profit, for my holdings price point, for a week now, it’s just the level of profit has dropped. Ideally I need it to be up over £5000 then I’ll take my original investment out, and then the rest is profit.

It is just a matter of calculated risk, if I’d sold 2 days ago, my outlay would have been halved, right now it would be reduced only a 1/4. So I’ll wait for the stock to hopefully go back up, then I’ll see what to do.

This stock has been a long journey, but the shovels are in the ground now, production is around 18 months away. If it goes to 40p a share, I’m mortgage free.. currently it’s trading at .09 of a penny. I think I’m in with a chance… lol. Oh look, a flying pig.

11

my banking PIE is +28% after 10 months - thinking of cashing now and reinvesting into my ETF PIE

dunno tbh