Getting out when a big trend has peaked -
two parts of this
1) Knowing
2) Acting
Acting is usually the toughest part.
First, you need somewhere for the money to go that you think might be better long term, or at least not to bad. When tech peaked, I was already into some energy stocks.
After energy stocks, I don't know what - biotech maybe,but that's moving already and is tricky. Utilities are doing ok and have nice dividends, but limited upside. Biotech and Utes are what I am into now.
Also, you need to be accustom to the fact that you will be selling early or late.
It can be useful to start selling maybe 10% of your positions at a time. Tha way, you get used to selling, you can look at tax issues for today and for what you are buying - buying some utilities early means those will cross the 1 year period for long term gains early.
Selling a little at a time means you want be clobbered by a sharp drop - you will already be out.
Towards the end of selling, you might want to hold some energy items a little ( 5-15% ?) past the peak for either tax reasons or diversity, especially if they are stocks with really BIG gains which would have big tax bites.
Look at what is weak, and what is strong, check the tax issues, and take about 90 minutes to write down a written plan.
With big gains, it reasonable to spend a few hours on how to keep taxes reasonable so you can keep what you made.
Best of Luck, energyplay |
