When to Sell Stock

Read any investment book, blog, or magazines and you will see a multitude of recommendations related to buying stocks. Unfortunately, little is written about selling the stocks that you already own.

I use three key principals in deciding when to sell a stock:
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1. Principal 1: Don’t be greedy.
2. Principal 2: Don’t be afraid to admit you were wrong.
3. Principal 3: Don’t let your carriage turn into a pumpkin.

When Greed Interferes: Puget Power (PSD)

On Friday February 7th Puget Power announced the closing of the sale of its core business at $30 per share. Regular readers of my blog will recall that I recommended a purchase of PSD in November of last year at $18. If one includes the $.25 dividend payment from Jan 16th, and the pro rata dividend of $.04 this transaction returns $30.29, or a profit of an impressive 68%.

While I am very happy to have a 68% win on a 3 month investment (and hope several of you are also counting your fortunes this weekend) I think this is a good time to turn around and look at the trade again to see if it was a wise trade or a bit of wisdom and a bit of luck.
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