enoriverbend
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What do you mean? If a stock you own has gone up in price, and you think it's appropriate to cash in, you can "take the profits" whether you have anything new to invest in or not. It's OK to leave cash in your account if you don't have an immediate investment urge. |
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girlwhoknowsitstrue
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This is how I do it.
I bought MSTR (microstrategy) at 63. It went to 130. I sold half of it when my money doubled, taking profits (to ensure that I got that amount). The stock then dropped to about 80 - but the money I made by selling I got to keep.
Once you hit a price point you think you're happy with, you sell a % of your position. If the stock keeps going up, you don't get the opportunity to make more money, but if it drops (like it did in MSTR's case), you don't lose that amount.
You don't have to buy anything - you sit in a cash position waiting for something else to be available. |
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Common Sense
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The dealer/trader/investor can take profits and keep the funds in cash. There is no requirement to "buy" something else.
So if I made $1000 on a trade & see the market is going down I may choose to sell the stock and in I will not suffer a loss (lock in the profit).
All this is easier said than done! |
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ajherden
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They bought the stocks at a lower price, hit their price targets, and cashed out by selling the shares. That locks in the profit. They don't necessarily have to reinvest the funds. |
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richard t
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people sold stocks they owned.............which were up from their purchase price..............
You don't have to be fully invested.sometimes cash is good.............. |
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Shaun R
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You don't need to have something else to buy to take profits. You just need to follow your own trading strategy.
Maybe the investor took their profits because they hit their target or got stoped out.
Whatever the reason they were probably following their own rules. |
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edco
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Why do you think you have to buy something else?
You dont. It's called being in cash.
Sell now, if the story improves, buy again.
Profits can also mean BUYING if you have a short position, stock goes down and you cover. |
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MM
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One question: why would you need something else to buy if you just got out of the market with lots of profit?
Historically, the worst times to buy into a stock market are when the public is most heavily buying into it. You can be sure the prices are soon to fall.
The smart money has already sold by the time you're buying.
Something to think about: reasons for stock market reactions are always given after the fact, and are very often wrong, misleading or just plain untimely. Sometimes there is no, nor should be, any reason at all. Sometimes there are reasons you won't know until much later because it benefits the people who do know, to keep it to themselves. |
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