If you talk to anyone who has bought stocks over the years, they will tell you of the ones that made money for them; eventually they will tell you the ones that lost money or they could have made more from. The stock was bought it went up, maybe it went up even more and then it came down; as it was coming down there was plenty of opportunity to sell and still have a profit but they rode the price down  until they were back to where they started from. There are many stories such as this and if the person does not have one – they are being less than truthful. The big question then is why is it so hard to sell? Part of the answer has to do with the reason to buy stocks is to make money, not necessary to sell right away. Part of the answer has to do with, it generally takes experience to set targets for your stock and be disciplined to sell part when the price has reached a certain price or you have made a percentage. If the stock goes up 15%, then sell a third of your holdings; you will still have 2/3s left and you have made money and there are always opportunities in the investment world. If you had owned oil stocks, they went up and you sold some, you had locked in profits and as oil companies share prices have declined you can buy the best quality for lower prices. The best quality stocks will rise faster and you would have made money even when oil prices fluctuate.  Another reason is because we are people we have attachments to the stock and we have to give something up to move forward. In a book called Necessary Endings by Dr. Henry Cloud published by HarperCollins, NY, 2010, the author discusses how we can change our perspective and go past the necessary endings.

Dr. Cloud believes how we see the normal and natural part of life and business endings do not have to be with hesitation, sadness, resignation or regret. They can be seen as positive parts of our lives. Knowing when to let go will help you in the rest of your life. For those people living in a home – clutter or pruning will be a known term. In a home we collect stuff, some we need, some we could throw out but have not (it might be important). In terms of pruning – if you have a home stuff grows in the yard and to make the plants better tree limbs or plants need to be pruned back. The issue is we have attachments to people and things, sometimes you have to “cut the losses” in order to move forward.

Linking to dividend paying stocks, in the above example where people ride a stock up and then down, the ride is easier if you are collecting a dividend along the way. In this fashion as the stock comes down the yield on the dividend goes up. This is good as long as the company can continue to pay its dividend which means it is earning profits. If you have no other reasons to sell, when the company no longer makes profits or can no longer pay dividends it should be long sold or you have moved to new opportunities.

There are more questions than answers, till the next time – to raising questions