When a stock hits your target price, sell or hold

slick

I know there are a number of MFO members that invest in stocks along with etfs and funds like I do. I reserve a small portion in my ira accounts for "trading stocks", which represent only about 5% of my total portfolio. I had been accumulating WWAV over the last six months and it has hit my target price that I arbitrarily set for it (its at its all time high).

I also have the same issue with SKX, and I have been raising the stops as they have climbed. Would like to know from some others how they have handled situations like this. I have about 40% profit in WWAV and 30% in SKX.

scott

Personally, I buy things with a view of holding for years (the railroads being a primary example), although that can certainly change at any time. I have occasionally sold after an aggressive move time higher in a brief period of time in the last couple of years. I don't have a "target price" for anything and pretty much everything pays a dividend, so I simply reinvest. I've tried to make assessments over whether something is "fundamentally expensive" in the last few years, only to see most of those things I thought were expensive get moreso.

In terms of WWAV, I think the valuation is rich, but I thought that about competitor HAIN a while back and look how that turned out. WWAV is possibly a target at some point, given how big the organic space has gotten. WWAV continues to get upgrades recently.

While the stock seems to have momentum and can't tell you to buy or sell, I just look at the valuation of this and HAIN and wouldn't buy either. Again though, that doesn't mean it can't very well go higher (or be the target of one of the big food companies like when General Mills bought Annies and if I remember correctly, that was done at a rather hefty valuation on Annies.)

Sketchers I have no clue about.

LLJB

Most of the time I just sell when a stock hits my target but in a few cases I haven't had something else that I wanted to invest in or I had a strong belief that the stock would continue up. In those cases I set stops initially to protect the price I wanted to sell at and I increased the stop as the stock continued to go up. Ultimately on a bad day I got stopped out and that was it.

Mark

My approach to speculative positions is:

I tune out everything but the 'price' action. As long as it is positive then I hold with a trailing stop.
Sometimes, depending on the issue, I might withdraw my original investment and let the rest ride.

Otherwise, and more commonly, I am like Scott in that my individual positions were bought to hold indefinitely or until something material happens to change my outlook. FWIW I consider myself to be a dividend and income growth investor.

hank

I think the question pretty much answers itself. That's my understanding of "target price" as stock investors usually apply it - that you sell when it's reached. Enjoy Oakmark Equity and Income's Commentaries - and they'll often come right out and state that they closed out a position because it reached their target price. Sure - often the stock keeps climbing after they sell it. But they have a disciplined approach and it's hard to fault them.

Personally, I don't invest in individual stocks. My funds tend to be along the balanced and hybrid lines, so there's never a need to sell - but there is a need to rebalance about once a year. For occasional speculative positions (currently overweight energy/NR/commodities), I'll set "target points" at which to begin incrementally scaling out - normally when the position reaches a certain percentage of total assets or within its investment sleeve. Rarely sell completely out of a fund.

Tampabay

Exactly: old Chinese investment Tip "Be careful what you ask for you might get it"

JohnChisum

I also hold stocks for the long haul as long as the circumstances I bought the stock on remain unchanged. Another possibility for selling would be portfolio bloat.

Selling could also be just trimming the holdings and still have a position.

slick

Thanks for the input all. As I stated, these stocks are not meant to be buy and hold stocks. I have a good assortment of those that I hold for the long term, and may redirect some profits from time to time, but these small and mid cap stocks that I trade are more like mad money. I find it fun to choose them and then see where they go.