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Turnaround Letter Associate Editor Randy Roeing recently made an interesting observation. He noticed that through October of this year we had already made more stock sale recommendations (16) than in any of the previous five full years. In fact, we have made at least twice as many sale recommendations so far this year as we made in each of the years 2008, 2009 and 2010.
There are at least a couple of good reasons for this increase in sale recommendations. First of all, it is always easier to sell a stock when it is going up. That means there are more people who want to buy your stock, and so you can get a better price. We occasionally quote Baron Rothschild who reportedly said in the early 19thcentury, “The time to buy is when blood is flowing in the streets” (in other words, when everyone else is panicking and selling). Nobody recorded what the Baron had to say about selling, but we’re guessing he would have said something like, “The time to sell is when things look rosy and everyone wants to buy.”
Secondly, it never pays to be greedy. There is an old Wall Street saying, “Bulls make money; bears make money but pigs get slaughtered.” What this means is that investors who consistently pursue a bullish (optimistic) long-term stock strategy can make money, as can investors who consistently apply a bearish (pessimistic) strategy. The investors who suffer poor investing performance—i.e., “get slaughtered”—are those who are greedy and who always chase the hot stocks or hold onto stocks too long.
You will almost never be able to sell a stock at exactly the right time—just as it peaks and starts to go down. If you try to do that…Read the full subscriber-restricted article on market timing.