Know When to Go

If you invest yourself, you don't want to make the same mistake, either. When you buy a stock, you need to set a realistic sell price when you make your purchase.

So how do you find a realistic goal when it's so hard to trust what Wall Street analysts say? There is no magic formula, and we believe you'll develop your own sense over time of what to expect from certain investments.

We have found over many years that the Value Line Investment Survey, which comes out once a week with a survey of around 135 stocks in each issue, is an objective and reliable source for evaluations of companies and what to expect from the share price.

(You can get the Value Line Investment Survey free at most major libraries, or invest in a subscription, which costs $598 a year for the print version and $538 for the electronic version online. We're subscribers. Information about Value Line and subscriptions can be found at www.valueline.com. You can start with a 13-week trial subscription for $65 for the online version to see if you like it.)

And remember: once you hit your goal, sell! Few companies stay on top forever.

You also want to check the news each day to keep abreast of comings and goings at a company. If you bought the stock because the company had a strong management team but then the board ousts the CEO, it may be time for you to consider selling. If the company was known for its successful research-and-development division but it spins off that division to focus on a completely different line of business, you should sell.

Dolan Smart Money Move: If the reasons that you bought the stock don't exist anymore, sell!

The other change to watch out for is downside. Although it's dangerous to generalize, a good rule of thumb to consider is that you should have a stop point if the share price begins a downward spiral. We think a 10% to 15% price decline is reasonable. If your share price drops this much, don't wait for it to come back up. It might never happen. Cut your losses and move on.

Related Links:

• How to Read Stock Quotes 101
• Dolans 10 Simple Rules of Investing
• Your Investing Mantra

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