No. of Recommendations: 5
Deciding when to sell is really, really hard. Some folks can do it, but I'm not an expert, despite trying.
On the other hand, I don't find it quite so hard to find good times to buy. So I find having a bit of cash on hand for pouncing works pretty well.
This is exactly correct for me as well. Right now I have about 35% in cash, mostly stashed away in T-bills of all durations and a tiny bit in 2-year T-notes.
I've also found over the decades that selling has cost me WAY MORE than not selling has cost me. I'll give my regular example, but there are plenty of them. Way back, I bet on TDFX (instead of Nvidia, but that's a different story) winning the graphics chip race. I bought some at around 20, and then doubled down in the low teens. I rode it all down to zero. So I lost an average of say $14 a share. I also bought and sold some UNH hack in 2008 in the 20s, and I made decent profit a few times by buying in the low 20s and later selling in the mid-to-high 20s. However, those sales of UNH have cost me over $500 a share so far (I held onto some UNH, but I *should* have held on to all of it). You can clearly see that I "lost" MUCH more on my sales of UNH than I ever lost on my non-sales of TDFX. And the same has held true for nearly every position over time.
Buying on the other hand is usually relatively easy. I have this trade that I do every few years. When Apple swoons and experiences a large drop, I "pounce" and sell a stack of puts at ridiculously low prices where I would surely be willing to buy it. For example, near the end of 2022, in September and again in December, Apple dropped into the 130s and I sold some near-the-money Jan '25 puts (LEAPS). Those will expire worthless in January, or if I want to take the short-term capital gain in 2024, I will close the trade in late December (the additional optionality of when to take the capital gains is another good feature of these LEAPS). And again in October 2023 when it dropped into the 160s, I sold some more puts, this time of the Jan '26 vintage.
