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I purchased 20 shares of tesla Feb 10th or 11th at $146.63 a share. I had a strong indication that the stock price over corrected with the downturn in the market and also the quarterly reports. I also assumed that with their upcoming Model 3 release the stock price would swing back up.

My exit strategy going into the stock was at $230 a share I was going to get my investment back out and let the rest sit until the end of time. I assumed that at best I could get $230 a share when the new car was announced.

Well on Friday it closed at $232 a share and there is still a week and a half until the announcement. It's very likely that this stock can approach $300 a share.

So here is my question. Does a disciplined investor stick with their original strategy and get out or do they stay in and make more? Also, I anticipate that this stock is worth around $260 a share. So am I silly for not selling it all if it goes above that?

Ehh good problems to have but still tough to decide. I don't want to miss bigger gains.

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    Not sure there can be an objective answer to this. I think the question is how certain are you that the stock is worth this much? You're taking a risk that a market event or an announcement will lead to another plunge and you'll potentially have to wait a lot longer to make a capital gain (or at least to not make a loss). If you take profit now you've locked in the difference. Personally I would lock in, but I think it's a matter of personal preference, risk aversion and certainty about future price movements.
    – SMeznaric
    Mar 21, 2016 at 12:30
  • @WBT lol good find. The answer is almost identical too.
    – DotNetRussell
    Mar 21, 2016 at 18:21
  • I cannot provide a detailed answer as the question has been closed, but why not place a trailing stop loss order on the stock, say 15% or 20% below the highest price reached. This will keep you in the stock if it continues to go up and will get you out if it falls to your stop loss level. It might keep going up to $400 or more or it could start falling tomorrow. This method will keep your emotions out of it and will let your profits run as far as possible. If you feel things are about to reverse then you could tighten your stop to maybe 10%.
    – Victor
    Mar 21, 2016 at 21:41
  • @Victor I love the idea of stop loss but EVERY SINGLE TIME I set these up, either through my bank or the other brokerages I have used, they NEVER EVER EVER sell. The price goes below my stop loss and it never freaking sells. I get so mad at it. Now I just watch it and sell when I want to sell it lol
    – DotNetRussell
    Mar 21, 2016 at 21:49
  • That is because you need to place a market stop loss not a limit stop loss. Or if you still prefer to use a limit use a limit a bit further down so it has room to move.
    – Victor
    Mar 22, 2016 at 4:28

2 Answers 2

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Ask yourself a better question:

Under my current investment criteria would I buy the stock at this price? If the answer to that question is yes you need to work out at what price you would now sell out of the position. Think of these as totally separate decisions from your original decisions to buy and at what price to sell. If you would buy the stock now if you didn't already hold a position then you should keep that position as if you had sold out at the price that you had originally seen as your take profit level and bought a new position at the current price without incurring the costs. If you would not buy now by those criteria then you should sell out as planned. This is essentially netting off two investing decisions.

Something to think about is that the world has changed and if you knew what you know now then you would probably have set your price limit higher. To be disciplined as an investor also means reviewing current positions frequently and without any sympathy for past decisions.

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  • I like looking at it like this. Good answer.
    – DotNetRussell
    Mar 21, 2016 at 12:42
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    @AnthonyRussell beware the confirmation bias. But MD nails it on without any sympathy for past decisions. - Past is past, shrug it off, learn from it and move on.
    – Mindwin Remember Monica
    Mar 21, 2016 at 14:49
  • Just to follow up and not leave anyone in suspense I got my investment back out at $230.63 leaving me 7 "free" shares and this morning it looks like the stock is going to get down into the low $200's soooo good advice!
    – DotNetRussell
    Mar 24, 2016 at 12:21
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One of things I've learned about trading on the stock market is not to let your emotions get to you. Greed and fear are among them.

You may be overthinking. Why not keep it simple, if you think it can go up to $300 a share, put in a stop loss at $X amount where you would secure your invested money along with some gains. If it goes up, let it go up, if it doesn't well you got an exit.

Then if it goes up change your stop loss amount higher if you are feeling more optimistic about the stock.

And by the way, a disciplined investor would stick to their strategy but also have the smarts to rethink it on the fly such as in a situation like you are in. Just in my opinion anyway, but congrats on the gain! Some gains are better than none.

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  • Thanks for the input. The main problem I have is being over rational and by the books. In 99.9999% of situations I find myself, sticking to the plan keeps you safe and keeps you on track for things down the road. Thheeennn there's the greedy side of me. Who says "Don't be an ass, HOLD! "
    – DotNetRussell
    Mar 23, 2016 at 11:57
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    @AnthonyRussell I hear you on that. Hopefully it works out well for you. Telsa is pretty solid fundamentally speaking.
    – NuWin
    Mar 23, 2016 at 22:04

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