Success Tip #3: Know when to Hold and Know When to Fold
Many advisors will tell you that you shouldn't sell your stocks. "Don't let reversals discourage you," they say. "Hold onto your stocks for the long-term." "Choose good companies that you'll want to own for the next 10 or 20 years."
This would be very good advice in a perfect world. In a perfect world, we'd all pick some great stocks, hold them, and never give the matter a second thought.
Unfortunately, we don't live in a perfect world. We live in a dog-eat-dog world. A world that doesn't sit still. A world where today's leaders become tomorrow's laggards.
Example: From the 1950s to the 1980s, IBM was the model of what a good business should be. Then more nimble competitors arrived and IBM shares lost 77% of their value! And this happened at a time when the rest of the market was quadrupling!
Department stores were another great success story for much of America's history. But then Wal-Mart came alone and ate them for lunch. Even the mighty Sears Roebuck got clobbered. Its stock price has been languishing for years.
There are dozens of examples of once-great companies that took a nose-dive. But I think you see my point. Companies change. The world changes. New trends occur. And disruptive technologies sometimes make entire industries obsolete.
You have to be able to stay on top of these changes . and know when it's time to sell.
Go to Key # 4
How Richard Schmidt Finds His Stellar Stocks
