It involves the issue of how to stop profit in trading. Specifically, these three issues need to be considered: 1. Are the reasons for buying still? In fact, investment is a long-term thing. We will not not invest because we make a lot of money on the books, but will think about

On November 2, 2021, Tesla stock price broke through the $1,200 mark. Should I sell it? Should those who make money run away?

involves the issue of how to stop profit in trading. Specifically, these three issues need to be considered:

1. Is the reason for buying still there?

2. Is the configuration ratio unbalanced?

3. Can you sleep at night?

In fact, investment is a long-term thing. We will not stop investing just because we make a lot of money on the books, but will think about how to adjust the pace to continue to hold for a long time. Only by combining rationality and sensibility can these three questions be consistent with human nature. Because the portfolio must be in line with human nature to last for long.

Why do you need to think about these three questions before taking profit?

Readers must first think, the stock price has risen so far, does the reason for buying it still exist? If the reason for buying changed, of course, some adjustments must be made and some choices to sell part or clear all the positions. But if the reason for buying did not change, there would naturally be no need to sell.

Why re-examine the reason for buying? If you want to make continuous profits in investment, the most important thing is discipline! The most taboo thing is to go with the flow without any opinion!

At the beginning, investors did a lot of research homework and finally derived several reasons for buying. Investors are also asked to stick to it and not give up. Of course, if the reason is wrong, it can still be corrected. The most feared thing is that when the stock price rises, I forget all the reasons for buying it.

For example, I am optimistic about the booming development of the electric vehicle industry in the next 10 years, but the stock price has risen 40%. When I am excited, I sell all the stocks.

What about the 10 years that it has been agreed upon? Where is the Tesla to the moon?

Come on, have you thought about it, what should I do after I sell it? Will it be spent? Or do you need to trade stocks? If you go around and find that your old love is the most beautiful, you have to buy it back in the end?

A single selling action will cause many subsequent problems to be considered, so I hope that investors will think about whether the reason for buying is still there before making a decision.

Investors may ask, but it is okay to sell a little bit of stock price so much, right? Maybe?

This extends to the second question: Is the asset allocation ratio imbalanced?

The second question that investors need to reflect on is whether the asset allocation ratio is imbalanced? Before talking about this issue, let me share with you a little secret to successful investment: 91% of the main reasons that affect long-term performance are asset allocation, and as for stock selection and follow-up opportunities, there are only 9% of the time!

This is very different from the information often promoted by the media, right? Due to space, I cannot explain it.

Generally speaking, investors will set an appropriate proportion for each holding position and first allocate from the product type. They can generally be divided into stocks, bonds or cash.

So asset allocation can be a ratio of 70% stocks and 20% cash for 10%. Then set an uneven ratio of about 1-10% for a single html stock .

Usually, you only need to rebalance regularly every quarter or six months. Because the stock price fluctuates ups and downs, the asset ratio will change. Rebalancing means adjusting the asset ratio back to its original state. Rebalancing such as implies the two benefits of profit settlement and increasing the price at low prices.

If Tesla has risen by more than 40% in the past month, the proportion of holding Tesla will increase significantly compared with other parts. For example, the original 10% increase to 15%. At this time, investors need to think about whether they can accept such an imbalance? Or do you need to make some adjustments?

You can make some fine adjustments, sell the additional proportion at a slight high, and make the profit-taking action. Note that such actions are not that they are not optimistic about Tesla's future, but that they are considering the health of overall asset allocation to make adjustments.

Investors may wonder: How to evaluate whether proportional imbalance can be accepted? Just ask yourself the third question: Can you sleep at night?

Why just ask this sentence?

The first two questions discuss the rationality of buying and asset allocation ratios, but we humans are both rational and emotional creatures, and we cannot only talk about rationality, so the third question needs to return to human nature and talk about emotionality.

There is no way to lie about being able to sleep at night. You can sleep when you can, and you can’t sleep when you can’t sleep, and you can’t deceive yourself. If the risk we bear is too high, we subconsciously pay attention to it frequently (because we are afraid of losing), and we will check the stock price more often than usual. Usually, the quality of sleep will decrease when you sleep at night.

For example, when you get up to go to the toilet at night, you will also subconsciously check Tesla's stock price. If you rise 8% at the opening before going to bed and slide to -1% at 2 a.m., will you still be able to sleep?

If you can't sleep, it means you are really taking too many risks and you are starting to worry about gains and losses in profits. It's time to make a profit.

summary:

First check whether the reasons for buying have changed. Tesla released its Q3 financial report in October. After reviewing the Q3 financial report, Mr. S found that Tesla is still on the right track and the reasons for buying have not disappeared, so it should continue to hold it.

Next, look at the second question: Is the asset allocation ratio imbalanced? If you find that Tesla's parts have increased from the original 20% ratio to nearly 24%, you will find that there is a little imbalance. So you can consider making some positions adjustments at this time.

Then ask yourself the third question: Can you sleep at night? Reflecting on the behavior of the past week night, if you are surprised to find that you will keep opening the stock app to check Tesla's stock price at night, and it is more frequent than in the past, causing the overall quality of sleep to decline. This can also be inferred that you must make some profits.

Investing can last for a long time when intertwined between rationality and sensibility.