Stock Market Roller Coaster

Recently the Stock markets made some big gains. What are you to do when this happens? Do you sell out and wait for a pull back or do you let it ride? In all the years that I’ve been trading stocks, I’ve done both of these tactics and have found that it’s better to take what profits you have instead of giving it all back. When I was a beginner investing in the market I made the mistake of letting the money ride to see if I can capitalize on making even more money.

Just like when you hear that you haven’t taken a loss in a stock until you sell out of your position, the same goes for your profits. You didn’t make anything until you have sold the stocks.

After the DOW made some major drops and looked like it it had bottomed, I started to build up a position in some stocks that I’ve been watching for some time and know that they were solid companies with good fundamentals. The stocks gained in value by about 25% and from my experience, I sold out of about 50% to 75% of those positions. What I didn’t expect was that the stocks weren’t done gaining value. The DOW pretty much leveled off, but the companies that I invested in had some more momentum in them. I missed out on an extra 10% to 12% of gains that I could have had if I just hung in there and waited.

My point is that yes I could have made more money than I already did, but I could have lost a good portion of those gains too if the stocks fell. I’m just as happy with the 25%-30% gains since they are now in my account as cash. There’s a saying that I’ve heard Cramer say many times and I agree with him. Bulls make money, bears make money and hogs get slaughtered. As long as you continue to make money in the stock market, you’ll be able to continue trading and investing in stocks.

Being able to sell when you’re up is easy as long as you don’t get greedy. I’ve spoke about it before and I will talk about it again. Be happy with the gains you made instead of getting frustrated over the money you could have. The same thing goes when you’re looking at a stock to invest in and before you get the chance to build a position in the company, it makes a big jump in value. You missed the opportunity and there will always be another one as long as you are looking for them. I watched too many people try to “chase” a stock up only to get in it right before other trader start taking their profits.

Don’t get yourself bent out of shape if you miss a ride up on a stock and don’t get “hog-like” by staying in the stock too long. Following these rules will help make you a better investor or trader.

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Tags: Beginner Investing, cramer, investing in stocks, money, stock market, stock markets, trading stocks

Filed Under Beginner Investing | 1 Comment

Tagged With Beginner Investing, cramer, investing in stocks, money, stock market, stock markets, trading stocks

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One Response to “Stock Market Roller Coaster”

Market Timing on June 1st, 2009 3:43 pm

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