5 Things to Do When a Stock You’ve Invested in Soars to the Moon

Everybody has one goal in mind the moment they decide to invest in stocks.  To make money.  And in the right place, at the right time, stocks can experience huge rallies.  These moments of good fortune are a big test for investors.  Because even though things are going well, it’s still possible to make impulsive errors.  Staying grounded is the only way to maximize potential profits from a sudden gain.

Think Clearly at All Times:

Chartered Financial Analyst Kieran Osborne explains that, “Successful investment management requires discipline, which involves focusing on long-term fundamentals, maintaining full investment, and following a systematic approach to rebalancing. It removes emotions from the decision-making process, and may ultimately prove to better achieve long term financial goals.” Here are a few quick tips on how to respond practically to windfalls in the stock market:

1.    Stay Away from Greedy Decision-Making:

Anybody who chooses a winning stock faces the exact same dilemma. That is, worrying if a decision to sell means leaving money on the table.  While it’s perfectly reasonable to hesitate with selling, don’t throw caution to the wind just because you feel like gambling.

2.    Investigate the Root Cause:

Regardless of whether a stock goes up or down, it’s always important to know the reason why drastic price changes happen.  Even when a change is to the upside.  If the catalyst behind a rally is tenuous, then the stock could end up crashing as fast as it rose.

3.    Take Some Profits off the Table:

At the end of the day, the whole point of investing in stocks is to make money.  So don’t be too embarrassed if and when you sell on winning positions.  All profits contribute to the stability of a portfolio.

4.    Remember that You Have to Pay Taxes:

Any and every transaction that generates financial gain in the stock market is subject to taxation.  Be careful not to manage your profits in a way that doesn’t withhold any money for tax.

5.    Don’t Let Yourself Get Cocky:

Being fortunate enough to choose a winning stock doesn’t mean you’ve figured out everything there is to know about investing.  So don’t become so overconfident that you abandon responsible investing strategies.

Conclusion:

Profit-taking in the stock market isn’t just a matter of cashing out.  Because there are temptations to fight, as well as obligations to account for with capital gains.  Even though it can be complicated to come up with an ideal exit strategy, make sure to stay level-headed throughout all the excitement. If you like what you just read from our blog, you’ll love the various informative courses, workshops, and events listed on our websites and social media. Whether you’re interested in personal development, or the overall improvement of your business, give us a call at 1 (800) 913-0222 to find out how Richard Martinez can help you break past your daily struggles and start soaring in success.