January 10, 2006

Taking Profits

On Saturday, a relative and I got into a discussion around the stock market. I told him that I'd had some good success in 2005 (as many did) by following the fundamentals - buying low and selling high. I only invest in those companies who I believe aren't fully valued, or have unique services. In 2005, I got lucky with Apple, Google, Baidu, Rackable, Transmeta and other tech stocks. That happens to be a market I know. But I also know when to get out.

Saturday, he kept telling me that profits only mattered after you sold a stock, not in a one-day bump. Of course they do! But I already knew that. Just this morning, after holding Salesforce.com (CRM) for only a week, I sold it for a 10-15% profit. Now I have cash in the account again and can decide where to go next. That's how the market works. Just don't tell me my cash doesn't do any good if it's not invested.

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