Consumers Digest

If you are holding a stock when do you get out?

I am beginning to think that you should buy stocks that pay high dividends. I am taking GE for instance, look at the 10 year chart, basically flat. I am beginning to think about QQQQ and SFINX both holds all of the component securities of the Nasdaq-100 Index (the Index). But even then look how the Nasdaq has hovered on the 2000 mark for how many years now. What is the best way?

Public Comments

1. Just keep watching the charts, and if you can get any insider info about new releases that you feel may be popular go in, and if you see it is doing well continue until you have a desireable profit locked in, and when you think there will be a fluctuation come out. The best are the most liquid stocks because you can easily get rid of them if it looks bad. But based on yours where there hasn't been any "major" fluctuations, there might not be a rush to remove stock, but if it should start to go down but slowly, leave it for a week and see if it goes back up, but if it continues to fall, or falls drastically then i would say get out. The only other reason I see to get out would be if you needed the cash, or wanted to take it out and use it towards another stock.
2. When the company it self is doing very bad. Airlines and Department Stores (CircuitCity) are a good example of companies that can go down the drain. The problem with GE is it's very diverse and will suffer in crashes. When the banks crash, some of GE does too. If less air crafts are sold, GE suffers, but they are likely not to go out of business, because they always have other investments. Flat is good if you don't want to lose all your money at once. Not good if you want to make all your money at once.
3. Stocks that perform well consistently over time with few risks and seem stable. But all stocks have some risk.
4. The only way to "outperform" the market is to hold LESS than the market. If the "market" has 100 stocks, you have to hold LESS than 100 stocks. If you hold 100, you have the market (i.e. index fund), and if you have MORE than 100, you are taking on ADDITIONAL RISK. And you're talking two different things. A stock that pays high dividends usually does NOT fluctuate much at all, like utilities. That's "income stock", whereas if you want to "get out" you're talking normal trading or "growth" stocks, where your gains comes from the prices going up, NOT dividends. There is no best way. Different investors have different strategies. Right now my bet is on shipping companies and online retailers and discount retailers for Christmas. After New Years I'll probably switch to something else. And I'm just doing paper trades (on wallstreetsurvivor.com, BTW, a good practice site) --- Kasey C, PC guru since Apple II days Always remember you're unique, just like everyone else.
5. You're asking the toughest question of all for stock market investors. As one of the other respondents has said: one size does NOT fit all. Here are a few thoughts, though: ** Simplistic answer = when you've made enough money, or may lose more than your comfort level. ** Contrarian answer = when your barber starts talking about the company. ** Answer for MBAs & CFAs = when generation of free cash flow starts to decline. ** Trader's answer = at the end of the day. ** Warren Buffet's answer = Never.