I’m buying diverse sized stocks for growth (aka, I don’t want a short-term return, if not, keep them for a while).

I would like some advice in relation to when I should sell a stock. I read several posts however I did not find valuable advice. Most of them say that I should sell once it reaches a loss of between 10% and 20%. But, if we check, for example...

Apple (market value)

  • It lost 15% of its value the last month
  • It lost 10% of its value the last year
  • It increased 90% of its value the last 5 years

Everything is timing and I do understand that. However, Let's say that I bought Apple stocks 2 months ago. At present I have a lost of aprox 15%, but, probably Apple will recover. In this case, when would "be logic" to sell...?

Now, other example: smaller cap and more riskier

CVRS: Corindus Vascular Robotics

  • It lost 7% today
  • It lost 7% last week
  • It increased 9% the last month
  • It increased 220% the last year
  • It lost 24% the last 5 years

Here he fluctuations are more marked and so the possible trust of growth of even recover.

In this case, when would be "logic" to sell...?

  • From the way you are talking, you are trying to short sell and time the market which rarely works. My advice is to find a company that is oversold but has a strong market position, aka a company that is oversold and has great growth potential in the next 5-10 years and hold it for that long (unless information comes out saying they lied about their revenues and are actually going bankrupt). – rhavelka Jun 3 at 21:00
  • @rhavelka - Per his example, if he bought AAPL two months ago, he's not trying to short sell and time the market. As for it rarely working, see the 15-18 month drops in 2000-01 and 2008-09. – Bob Baerker Jun 3 at 23:59
  • @Peter - Selling is a personal decision, particularly when it's a losing position. I'd suggest that you Google "When to sell stocks". There a many, many articles out there that describe many scenarios and reasons for booking profits as well as taking losses. Ultimately, you have to figure out what you're comfortable with. – Bob Baerker Jun 4 at 0:00

The reason you have not gotten good, logic-motivated, advice about when to sell a stock is that no such advice exists.

No one knows which stocks will outperform in the future. Current prices reflect the best expectations of a very large number of highly motivated and informed people. If there was a trading rule that reliably worked better than other trading rules, people would follow it and then it would stop working.

Your initial sentence indicates that you are looking for long-term performance. The answer, then, is to not sell anything until you need money. The only free-ish lunch in investing is diversification, which reduces your risk while maintaining your average return. If you are fully diversified, then you are done worrying about trading.

Now, some stocks do have a higher expected return, but they also have higher risk. If you can tolerate more risk, then you can tilt your portfolio toward those stocks. But choosing when to buy and sell them based on expectations is a fool's errand. Timing stock performance is something billionare hedge fund managers with armies of high-powered Ph.D.'s and supercomputers can only do a little better than chance. You are not going to beat them unless it be by luck.

If you like to gamble, no one is going to stop you. But you won't find a system that reliably beats random chance.

  • Good answer, the only thing I would change is the 'do not sell until you need the money' because you may be selling at a loss if the stock takes a temporary tumble. I think a better way to describe it is 'don't invest more than you are willing to lose, and don't sell until you are comfortable with the price' – rhavelka Jun 4 at 14:22

In addition to farmsy's excellent answer:

The data you provided have nothing to do with the question you asked. Whether or stock is up or down over the past month, year, or decade shouldn't influence whether or not you buy or sell a stock.

The question you should ask is "is this stock worth more than its current price ?". If the answer is yes, buy it, if the answer is no, sell it. If you think apple is now a sell at 170 when it was a buy at 200 you're doing everything backwards. Was it a buy at 200 ? did things change with the company ? If it was a buy at 200 and things didn't change it's a better buy at 170.

Obviously things did change and you should take that into consideration. So how did the china tweet/policy/trade war affect things ? Should that push the price of Apple down 10% ?

But all of the above is fairly short term. You probably shouldn't invest for the short term. But let me reiterate. A stock's price going up or down should not affect your decision to buy or sell unless the stock price goes up above what you think the stock is worth. The company's assets, growth, sales, income, etc. should be what influences your decision.

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