It is Never Too Soon to Take Money Off of the Table

08
August 25
Published 19 years ago By Admin

I have been doing a bunch of thinking about when a good time to sell an investment is. The reason is because I was speaking with an acquaintance about some stock options that he had with his company that he has only exercised once in his time with the company (7+ years).

It was a few years ago and since that time, the stock has appreciated 5 times the price of his exercise. Essentially, he “lost” a lot of money because of selling too early. He therefore decided that he would never exercise again until the grant was close to expiring. In his mind the stock will keep going up.

Ignoring the obvious flaws in his thinking in terms of the stock in a never ending trek upwards, it got me to thinking about when to take some profits on an investment gain. I don’t see the problem, if you are sitting on huge gains, to simply take some of the money you have gained off of the table. Even if you don’t have another use for the money right away, take some out to solidify your gains. At the very least this ensures that you enjoy the run up in stock price – because just as easily the stock can turn around and begin that awful, never-ending trek downward that becomes especially painful if you knew that you had a massive gain at one point (remember the tech boom i.e. Nortel).

There is a reason greed is one of the seven deadly sins…

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