Article: Is It Time To Bank Some Profit?

Discussion in 'Stock Market Forum' started by longtermbull, Jan 29, 2017.

  1. longtermbull

    longtermbull Administrator Staff Member

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    As the Dow Jones Industrial Average index (DJIA) continues to show further signs of strength many are now starting to wonder if it is time to bank a bit of profit. We have seen a significant increase in the US stock market since Donald Trump was confirmed as the next president. While there are obvious reasons for the Trump led rally there is concern that some prices are starting to factor in too much good news. At this moment in time the markets seem to be suggesting that Donald Trump will have everything his own way and even some of his more outlandish policies will be waved through Congress. History shows us that will not be the case…..

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  2. JR Ewing

    JR Ewing Super Moderator Staff Member

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    There's a saying "you'll never go broke taking a profit".

    While I don't recommend anything drastic in terms of shifting asset allocations, I think it's not a bad idea for the more tactical among us (who are aware of any possible tax consequences) to take at least a little of the relatively big % profits (particularly if earned in a relatively short time period) off the table here and there, keep some cash available, and perhaps hedge any positions that are more volatile than most.

    If a stock is no longer cheap, has had a big run up in a short time period, or is in your educated estimation otherwise likely to stall or decline in value for whatever reasons, I'd say consider taking some or perhaps most or all of the profits.

    If something materially has changed about a stock you owned that otherwise makes it no longer attractive, don't be afraid to exit.

    On the whole, I like a balanced portfolio. At least 40-50% or more in long stock positions, 10-15% commodities, at least a little in put/call options for hedging and speculation, and perhaps a few % in short term higher yielding debt... And of course some cash - sometimes as little as 5-10%, other times as much as 25 or even 30% or so on occasion.
     
  3. longtermbull

    longtermbull Administrator Staff Member

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    When looking at stocks I have bought in the past I tend to re-evaluate them by asking myself, would I buy, sell or hold the stock today? That pretty much dictates what I will do.
     

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