Take my recent Apple (AAPL) trade. I’ve been saying how Apple is underrated and how it was way oversold after hitting a 52 week high. I bought 24 shares at $130.00 when I felt the downside had been taken out and sideways price alluded to a bottom. Today I sold those 24 shares for a profit of $497. Why sell now? Simply put, I don’t want to be a pig. I know in the long term Apple is going to go back to the $200 a share level but as it rises I want to be peeling off my positions that are profitable. This way I can stay in the game longer and I’m not being greedy.
It’s important to recognize that in order to make money, you have to sell your stock. Numbers are just numbers. Paper profits, meaning that if you bought a stock low and now show a potential profit (but haven’t sold yet) are meaningless. Also by ringing in profits on the way up, it frees up capital that I can invest elsewhere. This is the way I invest. Buy beat up stocks of good companies on the way down, and as the price moves back up, sell off these blocks when they are profitable. It’s the only way to win in this kind of market.
I still own shares of Apple.
