Cut your risk with our sell-half rule

Article Excerpt

Our “sell-half” says that if you own a stock and you have doubled your money in it, you should sell half—so you get back your initial stake. However, the sell-half rule applies mainly to stocks we rate as Start-up or Speculative. Every case is different, but generally you should hold on to high-quality stocks even if they have doubled in price. One exception would be if a conservative stock you own (such as Chipotle, see above) were to make up too-high a percentage of your portfolio after doubling—say, more than 10%. Then you should consider taking some profits. Sometimes, well-established stocks get so high priced that we advise selling simply because they have gone too high. But as a general rule, it pays to be slow to sell your conservative winners, and quick to sell aggressive or speculative winners. winners. …