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[CHANEL5]

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INVESTING


Is It Time to Sell?


By Paul Elliott (TMF Rael)
May 22, 2006


Lighten up, rotate out, take a little off the table.
Whatever you call it, it all means "selling," and selling is tricky business. So before you reach for the rip cord, ask yourself this:
"What if I had never sold a stock?"
Honestly, would you have more money now or less? I set out to answer that question for myself this morning, and to back it up with some hard data, but I chickened out.
I already knew the answer. If I had never sold a single share of stock, I would be ... yes, richer than I am today. How much richer? Much richer. I can't give you a precise figure because once I saw it for myself, I knew I would scream. How about you?
It gets worse and worse and worse
I bought eBay (Nasdaq: EBAY) on a tip back in 1998. I dumped it two months later for a quick double. OK, that's not exactly true. In fact, it's an out-and-out lie. But there is an investor out there who did just that, and it does help to illustrate my point. Selling eBay back in 1998 is one of the most sickening things I can imagine having happened to another investor -- even after eBay's recent swoon. Since its first double, eBay has increased another 630% in value.
I didn't flip Amazon (Nasdaq: AMZN) for a quick double, either. But somebody did and left three more doubles on the table. I know a little how it feels. Take a look at a long-term chart for XTO Energy (NYSE: XTO). Scary. It hurts me to admit that XTO is just one of a handful of this decade's monster stocks I sold for a quick profit in the late '90s.
"So what did you do with the cash?"
How should I know? I probably bought another stock, but do you think it did as well as XTO? I sure didn't have a better stock in mind when I dumped it, and I don't recall buying a house or even furniture, either. (You'll see in a moment how this is relevant, believe it or not.)
No, I sold my meal ticket for no other reason than to lock in a nice gain. But what did I really "lock in"? Zip. You never do unless you pull that money right out of the market, which is not something you should consider now, especially if you're in your prime investing years.
That's right. Tempting as it is at times like these, I don't think you should try to time the market. A lot of folks claim to do it -- and a few actually seem to pull it off -- but not me. In fact, you might want to brace yourself, because I'm going to go one giant step further than that.
I barely believe in valuation
At least, not when it comes to selling. Sometimes a stock gets so cheap you have to buy it. This one guy I know (an unruly chap with a British accent who insists we call him "The Admiral") went absolutely gaga over Home Depot (NYSE: HD) when investors abandoned ship in January 2003 (great business, great price).
Need a more current example? Take a hard look at Wal-Mart (NYSE: WMT). The stock has gone absolutely nowhere for five years despite a stunning record of year-over-year sales and earnings growth. But the "value" math gets dicey when it comes to selling -- especially with growth stocks, and especially with winners.
How about a funny example? Two years back, I asked Tom Gardner -- we'll talk more about Tom in a bit -- for the one stock I should buy for my Roth IRA. "I love Moody's," Tom replied, "but it's a little pricey at these levels." I bought it that instant. (It's up about 100% since.)
What was I thinking? It's simple: I'll take a company a great investor absolutely loves over a cheap stock any day. If that same investor tells me the stock is "a bit pricey," I love it that much more. The fact is, I've met some great stock pickers in my day, but only a very few great sellers. Come to think of it, I've never met a great seller.
Promise me you won't get too cute
I'm not surprised that Tom and his Motley Fool Hidden Gems crew picked half a dozen stocks that more than doubled in value over the past two years. They work hard and stick to the fundamentals. Plus, they're fishing in a rich pond. Wall Street isn't snooping around these stocks yet, which creates inefficiencies and pent-up demand.
But just so you don't think I'm a Hidden Gems cheerleader, I'll let you in on a secret: I use the service to lead me to undervalued small caps with big potential. From time to time, Tom will tell you to sell, but I don't listen -- and probably won't in the future. Not unless the story is really broken. And not if it's a winner. I never sell on valuation.
That's how tragedies happen
There's a common perception that everybody gets wiped out in bear markets. But then you pull up charts of brave soldiers like PepsiCo (NYSE: PEP) and Home Depot's rival Lowe's (NYSE: LOW), and what do you see? A gentle slope skyward. So how on earth did anybody ever lose money on those stocks? Good question.
Know what else looks like that? The S&P 500, a.k.a. the market. Granted, when you zoom in, the ride looks bumpier than on a 30-year graph, but the trend is skyward. So how do you lose money in the market? Well, you either buy at the top in 2000 -- and only at the top in 2000 -- or you get cute and buy and sell along the way.
Consider this approach instead: Sell your stocks when you want to buy a house, furniture, or other major purchase. Sell when you have too much in stocks and you want to buy some bonds, gold, or collectibles. Sell when you have too much in any one stock. But sell a stock, or dicey market like this one, on valuation at your own peril.
You don't have to go it alone
Like I said, when you join a service like Hidden Gems, smarter investors than I will tell you when to lock in your gains. The choice is yours. But when Tom and the gang tell you to buy, you want to listen. After all, as of May 20, their recommendations are up 35.5% on average. That's compared with about 19.9% if you'd bought the S&P 500 instead.
Are you earning returns like that -- in this market? If not, give this a try: Tom is offering a free 30-day trial to Hidden Gems right now. This way, you can check out everything I've told you without it costing you a cent (you can even download the full write-ups on every single one of his picks).
Believe me, I feel your pain these past couple of weeks. But whatever you decide, just promise you won't get too cute.
This article was originally published on July 22, 2005. It has been updated.
Fool writer Paul Elliott promises to keep you posted on Tom Gardner's progress at Motley Fool Hidden Gems. All picks and results are posted on the Hidden Gems website (all yours with a free trial). Paul owns shares of Moody's, which is a Stock Advisor recommendation. The Motley Fool is investors writing for investors


Gruß C5

[oukej]

No no never.
It is time to buy.
Dow Jones hat cca KGV 14 , DAX cca KGV 12
Im Januar 2000 hatte DJ KGV 31
In letzten 110 Jahren in einer durchschnittlichen Dekade wuchsen die Aktien meistens vom 2. oder 3. Jahr bis 10. Jahr.
Jetzt also noch keine Sorge um grossen Crash bis 2010 oder bis KGV von Dow Jones nicht weit von 30 ist.

[yangying]

Antwort auf Beitrag Nr.: 22.188.416 von oukej am 20.06.06 16:10:20

leider (!) falsch, siehe WW Nr. 27 v. 03.07.06 Seiten 142/143: