Your Questions About How To Pick Stocks

Laura asks…

What is a good % of profit to take from a stock before selling it?

Several of the stocks is own are anywhere from 20-50% profit. What % is a good selling point?

John answers:

As I see it (and live it), the time to sell is when you’re afraid of losing your gains. I try to sell something every week just to avoid becoming a hog. When friends and associates ask if I’m not concerned I might be leaving a lot of profits on the table, I tell them a line I coined some years back:

“I never met a profit I didn’t like!”

Stock trading is not fun when we find ourselves worrying. It’s a delight when our trades work out as positive but only if we cash out. When I take my gains, by the way, I have them deposited into my checking account through the ACH or automated clearing house system. This way I not only get to enjoy my profits, I make certain that the original cash used to seed the purchase is recirculated into a new pick.

There are times I am convinced the picks have more room to go, yet I’m feeling threatened. After all, I make my share of mistakes just like anyone else. So I’ll sell a part position, perhaps a half or up to two thirds. I never sell off an entire position unless it’s been a loser for me or there’s a new pick I’ve got to fund.

My advice would be to sell half of each of your major winners and consider deeper cuts if you’re concerned. Enjoy your gains—you earned every penny of them.


James asks…

Which defense stocks are going to go up most during our occupation of Iran?

If we are going into another worthless war, I may as well make some $$$ off it. I’m thinking Boeing and Rayethon stocks are going to go well because they manufacture most of the bombs, what are some other good ones?

John answers:

Take your pick

Daniel asks…

What are good, cheap stocks to invest in right now?

I only have like 9 weeks to invest because its a game but i want the most percentage up, with the stock between 5-10 bucks.

John answers:

If it’s only a game, close your eyes, pick some stocks. 9 weeks in a stock market is like a millenium, a lot of things would happen.

Sharon asks…

How to pick the right stocks?

What stocks should I invest in, ones going up or down?

John answers:

It all depends on market direction and how good you are at selling. Finding good and bad stocks is actually very, very easy once you know how. Selling the stocks at the right time is a little tougher. That’s where most retail investors go wrong.

Two good books to start with are
How to make money in stocks by William O’Neil and
The Little Book That Makes You Rich: A Proven Market-Beating Formula for Growth Investing (Little Books. Big Profits) by Louis Navellier and Steve Forbes (Oct 5, 2007).

I like to invest in uptrending stocks in up markets and short sell downtrending stocks in down markets. But you can find uptrending stocks in any market. It’s just a lot fewer choices when most stocks are headed down.

That said, to answer your first question, if you’re looking for uptrending stocks to ride, you can go to Investor’s Business Daily’s top 50 for some very good stocks. Ride them until they turn down, and sell them. Then once in cash, you can find another stock to invest in.

Hope that helps!

Carol asks…

Should I open a Roth IRA before I max out my contributions to my ROTH TSP?

I have a Roth TSP through work and only put around $4k in it a year. I can put as much as $17,500.00 per year. I have been reading up about Roth IRA’s and they seem like a good investment, but is it even worthwhile for me if I am not even reaching my max on my Roth TSP yet. I think I heard the Roth IRAs have better and more choices when it comes to picking your mix (stocks, bonds, mutual funds, etc.) than the Roth TSP but I would be opening this through a financial advisor and they will be taking out fees so it doesn’t seem worth it for slightly better investment choices in my opinion.

John answers:

The tax treatment is the same for either. The advantage of the Roth IRA is you have MANY more options with respect to HOW the money in the plan is invested. The administrator of the TSP also charges fees, you just don’t see them as clearly. I would contribute ONLY enough to the TSP to get any match offered, then max out the IRA.

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