When to Cut a Winner

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State of the Market

When it comes to your portfolio, the stocks are like the players of your fantasy football team. They all serve a special role in helping you win.

But as Chief Income Strategist Marc Lichtenfeld explained last week, some stocks underperform and need to be cut.

We know that parting with stocks you love isn’t always easy, even when they’re dead weight. But in this week’s episode of State of the Market, Marc discusses an even more difficult investing decision…

When to cut a winner from your squad.

Say you have a winning stock in your portfolio… You might be tempted to hold on to the stock in hopes it will continue to rise. You’re emotionally invested in it now. It’s your champ, your ringer… right?


At a certain point, you need to take your profits off the table. That means you need to sell winners before they start losing some of your hard-fought gains.

Here are some tactics that Marc recommends:

  1. Sell portions: Selling off portions of your position allows you to take risk capital off the table while allowing the remainder to accrue.
  2. Set trailing stops: These powerful investing tools take emotion out of investing by determining a price at which you plan to sell in the event of a downturn.
  3. Buy puts for stocks and calls: Puts are options contracts that give you the right, but not the obligation, to sell shares at a predetermined price and time.

As Marc warns in today’s State of the Market video, asset prices are exorbitant, stocks are breaking record highs and we’re in a bubble on the verge of popping.

You will need an evolving, top-tier team in your portfolio – along with a solid, time-tested strategy – to weather storm.

Be sure to lock in some of your profits before it’s too late.

Click here to watch this week’s episode.

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