Investors often focus on when to sell aggressive stocks when prices go down. However, you also need to consider when to sell after strong moves up by hot small cap stocks.

Hot small cap stocks: An aggressive stock in your portfolio goes up by 300% or 400%. What should you do?

Our “sell-half” rule says that if a speculative stock you own has doubled, you should sell half so you get back your initial stake. Once you’ve recovered your initial investment, you’ll be able to think more clearly about the stock. Keep in mind, however, that oursell-half rule applies mainly to stocks we rate as Start-up or Speculative.

Every case is different, because each individual has different investment objectives, acceptable risk levels and so on. But,you should generally hold on to high-quality stocks, even if they have doubled in price. One exception would be if a conservative stock makes up too much of your portfolio after doubling — say, more than 8% to 10%. Then you should at least consider taking some profits.

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Sometimes well-established stocks rise so high that we advise selling simply because they have gone too high in relation to their current prospects. But as a general rule, it pays to be slow to sell your conservative winners, and quick to sell at least part of your holdings of aggressive or speculative winners.

In general, if a speculative stock doubles and you’ve sold enough to recover your initial stake,you need to consider the makeup of your overall portfolio to determine if you are over-represented in some industry or economic sector, and sell to improve portfolio balance. At that point, there is no rule of thumb we’d advocate about selling or holding.

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