Investment impatience destroys wealth in every market. Selling early limits gains while patient investors build wealth by riding winners, selling losers and collecting dividends. They steadily get richer. Successful investors patiently wait to deal with facts rather than acting in anticipation on rumor or fear.
Choose To Make Money Work course 215 lesson 7, answers the question, should investors sell to take profits? At the end of the lesson, links to related content help you learn more.
What you learn
Managing investments well is a skill to learn. Patient investors build wealth by riding dividend paying stocks. They ride their winners, but don’t sell to limit the gain. They sell the losers and enjoy the dividends. Successful investors do not act in anticipation but wait and deal with facts to avoid acting on rumors or fear. Follow that example to become a superior investor.
Doing nothing can be right
Real investors are in for a long ride. Investors do not trade or speculate. Many times investors make the best choice and do nothing. When riding a winning stock, doing nothing is the easiest way to make money. Early selling zaps potential wealth that could be yours. Wealthy investors got that way by being patient. You can too. Buy winning dividend payers and let those dividends and rising stock values add to your wealth.
Getting rich or avoiding going broke?
“You never go broke taking profits!” That old adage often gets used to justify selling a winning position. True, selling locks in profit. However, you don’t grow rich taking early profits or stopping a dividend stream!
That is the point here. Following the tired old adage will get you profits now but robs you of any possible future gains. To get rich, stay with your winners. Take the full ride to wealth.
Know impatience destroys wealth
Far too frequently I have seen people sell winners while holding onto poor or losing positions and, worst case, buying more of their under performing losers to “re-balance”! That is backwards! Sell the loser and ride or add to the winning positions!
Impatience is a wealth danger
The talking heads on TV, too many advisors that “churn to earn” and traders want you to take profits on your winners. That works to put your money into their pockets. These poor advisors routinely “work their book” and “churn to earn” by recommending trades to unsophisticated clients. Such trades build nice commissions and bonus payments for these “performers” but too often at the expense of client wealth.
If your advisor regularly recommends trading when you want to invest you have the wrong advisor! Time to get a new one! Don’t trade when you should not. Do not sell winners.
Traders and their facilitators generate most of the very high noise level in markets. They also generate the majority of the revenue for the brokerage houses and exchange. In their worldview all trading is good. It certainly is good for them but could seriously slow the growth of both your portfolio and climb to wealth.
Taking profits has opportunity costs can Profitable trades can cost you opportunity
Profitable trades can cost you opportunity and future profits. Trading does work well for traders. It also works for those who serve them. White Top Investor is all about investing, not trading. When you are investing, any trade taken when you should not, costs you unnecessary fees and all the potential future profit of that position.
The market and people around it can be noisy. All that market racket can make you think I must do something. Naturally, if you ask a trader what to do, “trade” will be the answer.
Adopt this basic thinking guideline: sell positions that show a loss, keep positions that show a profit.
This is not suggesting that you should never trade, hesitate to trade or resist any suggestion to trade. Just make sure that it is in your best interest before you proceed with any trade. When appropriate do not hesitate to make a move. But with your rising winners selling is not appropriate.
Nothing else will improve your investment performance like this simple, easy and very profitable move. Or should I say non-move?
Investing winners ride to wealth
When it comes to managing your rising winning positions the very best thing for you to do is nothing. To grow wealthy you need to do nothing but enjoy the ride on winners.
Think this way; the market does not and can not beat you, however you can beat yourself. Develop the knowledge, think it through, act when needed and be patient with your winners.
Big money is not made by trading. It can be made by riding winners higher. Find, buy and ride those winners! And always remember the investment danger impatience zaps wealth.
Why this lesson matters
Managing investments well takes a broad understanding of markets. This lesson provides some basic investing knowledge. Patience pays for investors. They build wealth by riding dividend paying stocks with no concern about “beating the market”. They sell the losers and enjoy the dividends. Successful investors do not act in anticipation but wait and deal with facts to avoid acting on rumors or fear. Follow that example to become a superior investor.
Lesson takeaways,
Investment impatience destroys wealth:
Investment impatience destroys wealth in every market. Selling early limits gains while patient investors build wealth by riding winners, selling losers and collecting dividends. They steadily get richer. Successful investors patiently wait to deal with facts rather than acting in anticipation on rumor or fear.
- Investors ride winners.
- Superior investors sell losers.
- Investors enjoy collecting dividends.
- To win, avoid stock market risks and gambles.
- Doing nothing can be your best investment choice.
- Don’t just avoid going broke, invest with patience to build wealth.
- Choose to become a money making superior investor.
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Money Making With Investing Success,
lesson links:
Key investing success lessons Lesson 1
Top 4 ways to find money to invest Lesson 2
Time to invest or time for an advisor Lesson 3
Low costs double returns as ETFs beat mutual funds Lesson 4
4 Successful investor traits Lesson 5
Small investors have advantages Lesson 6
Avoid 6 investing sins Lesson 7
Investment impatience destroys wealth Lesson 8
3 Yeses or no investment Lesson 9
Investing can be fun, interesting and slow Lesson 10
Warren Buffett explains gold Lesson 11
Smart investors use smart diversification Lesson 12
Next course 215 lesson 9:
3 Yeses or no investment
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