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Q: My question is on trimming winning stocks. You will often comment on this question that it is about the size of the stock in relation to your portfolio. I have a number of stocks that are half positions which are up 100-200% so now are almost full positions so I don't "need" to trim them. But I'm often tempted to trim at a new high to take some profits with the idea of re-buying on a pullback. I realize this is market timing so I hesitate, but I've also seen thousands of dollars disappear on a downturn. I have bought some stocks I think of as longer term trades so I have sold them after a profit and it has felt good to cement that profit so to speak. But some stocks like Apple, or BN that I see as more core holdings -with these type of stocks do I trim or just leave them, let them run and buy more on a pullback with new money presuming I have more. Any further articles on this would be appreciated as well. Thank you!
Asked by Pat on December 05, 2024
5i Research Answer:

Here is an article we (Peter) wrote on the topic for Canadian MoneySaver.

Generally, we want to let winners run, until 'something changes', be it management, debt, execution or continued mis-steps. No one goes broke taking a profit, but no one gets 10,000% returns if they sell after a double, either. We like to trim for portfolio management reasons: we do not want to 'bet' on a single company. When considering a sell, we like to put ourselves in the buyers' shoes: Why are they buying? They are not buying the stock with the expectation to lose money. With core, reliable stocks such as those mentioned, we would prefer not to trim. But investors need to be prepared for corrections, and if investor timeframe is short, or one is prone to 'reacting' to sharp market movements, then trimming is certainly more of a viable option.

Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in AAPL.