One of the toughest things to do in investing is to take profits on a winning position. It is human nature to just assume that strong stocks are going to remain strong, but unfortunately that is not always the case, and in some cases it is better to go ahead and lock in some gains and seek better value elsewhere.
We want to take a closer look at a handful of stocks that fall into this category, each of which have rewarded investors with nice returns of late, but also appear to have lost their momentum and are in jeopardy of giving back some of their gains.
The point of this article is not to suggest that you completely sell off your position in these stocks, but instead to consider taking some profits off the table in order to lock in some gains.
Most investors set up their portfolio holdings by allocating a certain amount of the capital into each stock, but as our strong stocks rise in value, they often become overweight in our portfolio. What started off as representing 2.5% of your portfolio can quickly rise to 4% or 5%, and this is the time that you really want to make a move to re-balance your portfolio.
If you own the following stocks, take a closer look at your positions, and decide whether or not now would be a good time to lock in some gains and re-balance your portfolio.