July 12, 2024

Five ways to book profits on your stock portfolio

Given the all-time high valuations of Indian stock markets and the uncertainty surrounding the sort of earnings recovery, it is understandable that many investors want to take profits and exit the market before the New Year. This article enlists some of the ways to book convincing profits from your stock portfolio.

Major ways to book profits on your stock portfolio:

Reduce the number of times you sell: Time is everything when it comes to the stock market. This is true both for when you make your initial investment in a stock and when you decide to sell it. It is crucial that you treat your sales the same way you treated your entry into a stock, whether you did this by purchasing several lots at once or by averaging it out over time using SIPs. Use the SWP technique and sell your shares in equal quantities over time if you don’t have any specific value goals in mind when selling a stock. Avoid selling off all of your investments at once out of panic in the face of a single market blip. You can undoubtedly be startled by a quick rebound. Consider the current HAL Share Pricebefore selling.
Instead of percentage increases, use values: One of the most difficult decisions an equities seller must make is deciding which stocks to keep and which to sell. There is a lot of advice available on this issue. Some investors suggest that you sell stocks with large profits, such as 100% or more. Others want you to sell just enough of your shares to recoup your initial investment, leaving the remainder “free of charge.” Others advise removing cash once you’ve attained a target return of 20% or 25%. All of these strategies are better suited to short-term traders than long-term investors looking to earn large financial gains from stocks.

Get rid of losing positions: According to Warren Buffett (his word, not ours), retail investors are known for weeding out their portfolios and trimming the flowers. The most common mistake they do is recording profits on winning equity investments too soon (often based on goal returns) and holding onto failing assets out of desperation. This is the top company in an equity portfolio that has a long tail of bad stocks and only a handful of long-term compounders with strong fundamentals. When deciding whether to sell your portfolio, don’t get caught up in the idea of making a profit on a stock that has already delivered. Reduce losses for people who haven’t in advance.

Avoid making all-or-nothing choices: You’re confident that the stock market is overvalued and that a devastating catastrophe, like to the one in 2008 or even in March 2020, is imminent. If this notion is pushing you to sell all or the majority of your stock holdings in order to increase your cash reserves, think again before taking any action. To begin with, predicting market peaks and bottoms is challenging. Without a question, the financial markets are booming right now, but it is difficult to predict how or when they will turn around. Since it started, this central bank-induced stock bubble has been predicted to burst, but international analysts have always been unimpressed. After all, dividends account for a sizable portion of the value of the stock market. Consider the price of Bharat Dynamics Share Price before selling.

Contingent Profit Booking: Investors are getting more familiar with this novel approach. Think about making a Rs. 1,000 investment in stocks over a year with a 20% return target. The investor will withdraw his initial Rs. 1,000 investment after a year and maintain the remaining Rs. 200 in profit in the stock to grow as the store’s price increases. But watch out for any unneeded stock accretion or aggregation in your portfolio over time.

These are some of the most prominent ways to book profits on your portfolio and make a fortune.

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