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There are several reasons. The first is, for the life of me I can’t remember why I bought it. I should of course keep a diary of these thoughts but I don’t.
This might seem strange but one of my rules of selling is, if I don’t remember and can not recall why I own a stock, then I sell it. It’s a good rule that I invoke now and again.
I think I bought it on the Brazilian news and liked what I read, but 70% profit in a month leaves me scratching my head.
The second reason is I used to sell automatically +30% and this target has got neglected because I’ve been trying to hold on for the big win I used to very often miss. A revised 70% target seems to feel right with the increased volatility we are enjoying, so this acted as a trigger to look to sell.
Also studying my selection of ancient portfolios I note most companies fold in the bitter end, 7 to 10 years later, while a scarce few rocket incredibly and end up delivering the average return in spite of the many disasters.
The rarity of the big winners is such I’m not happy to rely on them, with a buy and hold strategy, to make me my return. So bailing out at a certain part of the profit cycle is a good idea, rather than hanging on for ever relying on a miracle share to make up for the privations of time. As such you must turn the portfolio over every couple of years. In this model you have to take profits as they come.
The last reason is the company does not have a business, it has the promise of one. In these situations you have to sell hope. This is what I have done and within minutes the bit falls 14%. Such displays of trading genius are usually followed by humilitation, so shortly the stock may rocket again. In any event there are another 2000 shares to play with and there should be no looking back.
