With so much uncertainty in the market these days, many investors have switched from a "buy-and-hold" approach to a short term approach. Big named companies such as RIM and Nortel’s share price have been decimated over the years taking the hard earned profits of passive investors. A personal example, in April 2011, I had profits in excess of 100k but greed stopped me taking money off the table, and by August 2011, I was left with 20k in profits. Looking back, I should’ve used a trailing stop loss or sell 50% of my investment off once it doubled. Any method would've increased my overall profits.
That's not to say take everything off the table if you're up $100. Take profits at predetermined intervals until you reclaim your principle investment then let your profits ride. The fact that you left 50% on the table means you believed there's upside potential otherwise you would've sold everything. If it happens you're right and the stock price explodes, fantastic! If you happen to hold a loser like Sino-Forest, that's ok too because your principle is safe. Minimizing risk and maximizing returns is the whole point of investing. If gambling is your thing go to a casino.
- The Hawk
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