Want to become a more successful trader and investor?
One of the hardest things for investors is to manage their holdings after a decision is made. When should you sell? How much should you buy? Should I take partial profits? When has a stock gone up enough to take off some chips?
In this week’s Market Call, Louis Llanes, founder of Wealthnet Investments, LLC reviews the 3 most important techniques that must be mastered to be a successful trader or investor including:
- Protecting capital from losses while leaving enough room for winners.
- Capturing a portion of profits from winning trades that can turn into losers, and
- Holding on to the big winners, without getting shaken out.
When to Take Partial Profits or Reduce Your Investment
To help illustrate the 3 techniques, Wealthnet created a table of statics showing the history of stock moves over two time-frames – 1 year, and 1 quarter. The movement of stocks is highlighted to show how your time frame is related to your reward/risk. This helps investors see the history of movement that suggests when to take partial profits or reducing your investment to protect capital. For a full explanation, click to watch the video.
(Source: Wealthnet Investments, LLC, Dow Jones Industrial Average Statistics)
Examples: Amazon, Exxon, and Visa
Louis discusses Amazon as an example protecting capital, Exxon as an example of a winner turning into a loser, and Visa for holding on to big winners. If you invested in Amazon at the wrong time, you would experience big losses, even though the stock has made huge profits for investors.
Louis explains what is a “normal” move in stocks in terms of volatility. Exxon is an example of a stock that moved higher initially but then fell for an extended period. There could be opportunities to take some money off the table to lower the cost of losers.
Visa, is a stock that had great returns, but also shook many investors out during short term downward blips. Louis also discusses how it is important to understand the fundamentals as well as the normal movements of stocks in order to assess what stage a stock may be in.
Louis also discusses 2 investments holdings that reporting earnings this week including GrubHub ($GRUB) and IQVIA ($IQV). A review of the week’s stock market action including momentum and breadth is also discussed.
When you are ready to learn how we can help you invest, email us at firstname.lastname@example.org