5 Things to do Before Selling a Winning Stock

stock sellingAutoCanada Inc. was the subject of 5i Research Inc.’s first research report after we launched our company in January 2012. It was given a B+ rating and its share price was $6.30. Now it’s at about $70 per share making it that rare 10-bagger — that is, a stock that has increased tenfold.

We’re not gloating, but it is, of course, great to pick such an investment winner. Many investors, though, might sell such a stock, because it is up. However, there are many points investors need to consider before selling anything, especially a 10-bagger.

Consider the weight of the stock in your portfolio

A stock’s portfolio weighting is going to substantially increase when its price rises so much. Depending on your initial position and your other stock holdings, a 10-bagger might represent 10%, 15%, 20% or more of your total portfolio.  Read More…

This article has 9 Comments

  1. Jeri

    Very informative read. A lot of new investors (like me) should read this and take it to heart.

    I for one have been guilty of selling to quick on the first sign of success (stock goes up) or trouble (stock goes down).

    I've learned the value of rebalancing my portfolio yearly to keep things in check and prevent one holding from outweighing the others which can be bad when things turn south.

  2. Rickie Hartridge

    Capital gains tax in Canada is reasonable and so is the charge against dividends. If anything i think its a bit too low.

  3. Dusty Y

    I am still amazed how there are always buyers for stock trading no matter how high it goes. I mean i use to own Apple when it was at 600 per share and i thought it had reached its peack (it did) but yet there was some person out there who thought it would go higher. That poor soul. 😀

  4. Unique Markichevich

    Just made my first investment this year and ended up losing quite a bit. My mistake was relying on friends. Lesson learned: do my homework.

  5. Maximilian

    It's nice to know that there are a variety of paths one can take to reduce taxes or rather make it more tax efficient. I for one make use of all the benefits that is to offer from TFSA, RRSP, RESP, and regular margin accounts.

    I find that most people don't understand about withholding taxes that get charged by both Canada and the US for certain securities dependant on what type of account you are using.

  6. Bishop

    People don't like to learn about the going ons with a company. This is why so many people put their hopes and savings into mutual funds.

  7. Isidore Black

    Been a long time investor and although i think a lot of it is still chance its really about mitigating the damage by diversification. And then every so often you make the big play through calculated risks. It's still a fun thing to do. I can't understand why people only do the simple task of buy and hold or panic and quick sell.

  8. Jovani McMurry

    Why sell a portion of this winning stock when you can simply buy more shares of your others to bring it back into check? That way you save on commission fees. That is what I always do. I guess though some people need to get the capital gains to go spend it on something.

  9. Aidyn V

    The hard part is knowing when to sell! Most people fall into two camps:

    1. Sell too early and regret it the next day/months for not holding off
    2. Sell too late and make a tinier profit or a big loss

    This is where i think luck plays its part.

Leave a Reply

Your email address will not be published. Required fields are marked *