How to Nail Down Your Profits: 20 Questions for a Disciplined Approach

by Donald Cassidy

To be successful, an investment must not only be bought well, but also sold right.

Until sale occurs, the apparent outcome is merely a tentative, paper result. A handsome profit can wither at any moment (due to sudden bad news or a market meltdown) until it is actually nailed down.

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About the author

Donald Cassidy was senior research analyst for Lipper Inc., a Reuters Co., from 1990 to 2006. He recently founded the Retirement Investing Institute, a nonprofit educational foundation, and is the author of five books on personal investing, including “It’s When You Sell That Counts” (now in its third edition). Contact the author at don@R-I-I.org.
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Properly, much attention is given to studying what to buy, but woefully inadequate energy is devoted to the hold/sell decision. Ironically this is backward, since dollars already invested are at more risk (and so deserve more attention) than cash not yet invested.

In this article, I’ll discuss how you can implement a discipline to your decisions on whether and when to sell. This is not the usual advice to use stop-loss orders or trim positions to restore intended allocation percentages. Rather, this approach focuses your plans for an exit strategy from the moment you enter a particular position—in an effort to overcome inertia and produce advantageous, coolly implemented exits.

Buying and holding reduces costs and taxes. But this approach assumes two critical points:

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→ Donald Cassidy was senior research analyst for Lipper Inc., a Reuters Co., from 1990 to 2006. He recently founded the Retirement Investing Institute, a nonprofit educational foundation, and is the author of five books on personal investing, including “It’s When You Sell That Counts” (now in its third edition). Contact the author at don@R-I-I.org.

Discussion

I could not print this, save it, etc.

Anyone know why?

posted over 2 years ago by Jim from New York

Just copy and paste into a word processor. I found it very easy. If you do not know about copy then highlite with your mouse and press Crl C then go to your word processor and hit CTL V and that will paste it into the WP and you can save or print it out.

posted about 1 year ago by F from Kansas

August 2008 Issue

Financial Planning
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The question every investor wants to know is: How well am I doing? Although some people are satisfied simply watching the dollars grow, most investors want that translated into a performance figure. A look at two methods for calculating your portfolio's return.

Stock Strategies
How to Nail Down Your Profits: 20 Questions for a Disciplined Approach
Much attention is given to studying what to buy, but inadequate energy is devoted to the hold/sell decision. This is backward, since dollars already invested are at more risk than cash not yet invested. How you can implement a disciplined approach to your decisions on whether and when to sell.

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