I bought an under valued stock a couple months ago that saw a nearly 50% drop in price over FCC issues. They just reported better than expected earning and settlement with the FCC which has caused the stock to jump nearly 40% this morning since I purchase it in august. I originally bought it with holding it for a year or longer in mind. Would it be prudent to sell it and cash in the 40% rise in 2 months, or continue to hold it for the long-term?

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    Did it meet your price target? Did you have a price target? Have fundamentals changed to justify a new price target? – Chris W. Rea Oct 29 '15 at 13:46
  • My long-term goal was to double my principle investment in it because it has enough volatility in its movement to potentially offer a doubling, especially when I bought it for nearly half its trading price. I will add that its current trading price is already above the one year projected price target set just a month ago. – Alex Oct 29 '15 at 13:57
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    Would you buy it at its current price? If so, keep it. If not, sell it. – ChrisInEdmonton Oct 29 '15 at 16:00
  • This isn't good enough for an answer, but I've noticed that rapid gains of 35% or more seem to be very problematic and apt to dramatic reversals. I now have a rule that if I get such a gain I sell out at that point. But I can't point to any definitive evidence for this belief. – zeta-band Feb 1 '17 at 20:38

Depends entirely on the stock and your perception of it. Would you buy it at the current price? If so, keep it. Would you buy something else? If so, sell it and buy that.

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    I would have to add as far as behavior goes if he is here asking the question he doesn't think it is good enough to keep ;) But man think of all the people that sold apple after that first 40% gain. – Ross Oct 29 '15 at 15:06

Sell half. If it's as volatile as you say, sell it all and buy on another dip. No one can really offer targeted advice based on the amount of information you have provided.

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    Well, that's certainly an answer if you can't decide... you can claim to have been tight, or wrong, or both, no matter what happens. – keshlam Oct 29 '15 at 19:32

Did you buy near the bottom? Suppose you did then the price is still 16% below. 50% fall and then 40% increase leaves a 16% gap.

So there could still be upside. However, it appears that you are talking about a small-cap that is volatile. I wouldn't hold it. I would take the money and invest elsewhere.

If you have a lot of shares and brokerage is less then sell 60% now and the remaining 40% on either 10-15% jump in price or if it falls by 5% from now. Too risky to hold longer-term.

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