Selling stocks to protect profits

Hi all!

Maybe a newbie topic but here it goes.
Assuming I have 10k in X and an unrealised profit of 20k. I could sell 10k and reinvest in Y keeping 10k in X.

What are your thoughts regarding selling stocks to recover your investment?

That is just mental accounting.

You shouldn’t base your investment decision on recent performance.


Newbie answer : I guess it depends on the stock X… If X=GME then yes, you would certainly be better off selling it fast.
If the 200% gains were made quickly and the risk of having the value of the stock dropping fast, then yes, selling could be a good idea.
But with single stock strategy, the heavy % variation can go one way or an other


Hi, sell only if Y is a good investment otherwise stay with X unless you need funds for other investments

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It depends, as always. Don’t sell your winners too early. If they are really good, they might 5x or 10x over the long-term. But be wary of over-concentration on too few stocks, so consider selling if one, or few stocks make up a large share of your overall portfolio. And sell if you are no longer convinced that this stock is a good investment or if your risk appetite changes. Of course, a lot of this depends on your assumptions, but that’s always the case in active investing.

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