When / how to take profit, and what to do with them!

Investing
#1

Only been investing since October so very new but learning.

One thing I can’t quite work out is when and how to take profit.

Do you let a holding grow then take your initial investment, leaving only profit to carry on that holding? Do you take profit and leave remaining investment?

I’ve got some that are 100 / 150 even 300% up and am keen to avoid seeing a repeat of one holding I had that went from 170% up to 6% up (still better than having it in the bank, but that lost potential stings a bit)

Then, do you re-invest that profit or use it as income?

I guess alot will come down to long term plans/ how risk averse you are etc but would be really grateful to get opinions on this.

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#2

It all really depends on what you’re investing in is what I would say.

By the sounds of some of your returns it sounds like they might be more speculative stocks that are suited to trades rather than investments? If that is the case then maybe do some learning on reading charts for example? Or if you’re unsure when to take some profit if you’ve had a massive run, then take half out, leave half in. Remember, profit is never profit until it’s in your wallet!

There are then investments that you generally would want to hold almost forever, or say over a 5 year period.

As buffet says " Lethargy bordering on sloth should remain the cornerstone of an investment style."

In summary it all really depends on your investment style and also the period of time you actually have in the market. The longer you have in the market will reduce your risks.

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#3

If its speculative then when you buy you should hopefully have an idea of how much return you want to make to then exit, or for example you could say if its 50% up or 100% up then take half out or your whole original mount out and let the rest run etc.
I dont do much speculative plays but during the recent GME madness I decided to use a small amount of free cash to play AMC for a trade, I look at where others we wanting to hold (I think it was like 19/20 So I entered a trade around 14 exited about $17.5 and put that money into solid companies. AMC was never a long term play, it was a, ok I see there is high chance of 30% volatility from here lets play for 20-25% and exit.

But as @Jobloggs says, other stocks, for me most of my portfolio, are long term holds so I have seen $BABA go up then drop massively twice recently, I just bought some more and enjoy holding.

Lastly you mention income, so for myself I have a job which supplies my income, my investments are purely to compound and reinvest. So the AMC trade was merely to harness some predictable volatility to potentially supercharge (a tiny amount) my portfolio growth. All dividends I get are reinvested.

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#4

My objectives are long term growth - but as a new investor it’s hard to not let the emotion get in the way and panic - especially over the last few days that have seen many holdings drop.

Guess it’s eyes on the horizon, not the end of your nose!