Knowing When To Sell

Knowing when to sell an asset is extremely important for building wealth. In trading, it can be argued that it is the king of the jungle. Selling too early or too late can haunt wealth builders. Getting the best price for an asset is almost impossible. But if you can get a price near the high, you can consider yourself lucky. Whether it is the stock market, the real estate market, or any business market, selling at the right price at the right time can mean the difference in the ability to become wealthy.

The stock market is a fantastic example of how knowing when to sell can create or prevent wealth. Recently, the trading blog Trading Futures ETF Options wrote about a trade in the S&P 500 ETF SPY and the Japanese Yen ETF FXY. Both trades had good entries. The plan for when to sell was another matter for both. Had the exit plans on both trades been executed properly, the trader would have made in excess of 3000%. A quick synopsis is below.

The goal for SPY trade was changed due to the mindset of the trader when it should not have. Profits were cut short. The profit was 10% when it could have been as high as 500% had the trader waited another couple weeks to let it work out.

The FXY trade was deja vu. The trade had a great entry. The initial goal of the trade was actually reached. But instead of letting the trade run, the trader sold at first blush. The trade made 100% but missed out on an additional 700% had the trader waited another couple weeks to let the trade work out.

Remember to understand your business plan before the need for a decision needs to come up. That way emotions will be kept at bay and the business can succeed at a higher level.

The fuse has been lit

This economy has the real opportunity to roar back in 2011. The GDP numbers were up an annualized 2%. This is great news considering the fact that corporations in the S&P are holding on to $1 trillion dollars and not hiring! It is not normal to find positive GDP without hiring or spending by corporate America.

There is a feeling that once the mid term elections are over, there will be more certainty as to how governmental economic policies will be shaped. That alone will allow corporations to act and start hiring again.

Article on Profits or Hiring

William Arden has written an article for The Huffington Post that outlines the fact that companies making up the S & P will make $189 billion in the past quarter.

This shows a sense of greed and fear. It also seems to show a laser focus on the short term and almost no focus on the long term.