When it comes to momentary thrills, few things measure up to pulling the trigger on a buy order. You've done your homework (right?), and you're ready for action (check!). Now all that awaits are those eye-popping returns.
Trouble is .
Alas, all too often those returns don't materialize.
Selling, however, involves an infinitely more complex set of decisions than the all-too-often emotional choice to buy a stock. If you're down, you have to reconsider your original thesis and -- if it's intact -- decide whether to increase your position to take advantage of the market's inefficiencies or cut your losses and move on.
Consider, for example, the conundrum that investors in the likes of Boston Scientific
On the upside
What's more, even if your investment has panned out, savvy types have to consider opportunity costs. At some point, after all, it pays to harvest your gains and redeploy those assets to prospects that have better forward-looking, um, prospects.
I bring you Starbucks
These big winners may well have further room to run, but there's a case to be made for selling (or at least trimming) your position and investing elsewhere.
Which prompts the question: Where, exactly, is elsewhere?
The easy answer
If you're reading this, chances are strong that you're a money management do-it-yourselfer. If so, good -- no, great -- for you. I firmly believe that anyone who's willing to do his or her investing homework should be rewarded for the effort.
Then again, how much homework do you want to do?
As point person on the Fool's Champion Funds newsletter service, I'm here to tell you that while lousy funds are plentiful, it's 100% possible to cherry-pick the fund industry's best bets and use them as centerpieces for your portfolio. Then, if you're so inclined, you can supplement those funds with individual stocks culled from the market's most promising prospects.
A sweet combination, no?
Mutual funds, after all, can help provide smart exposure to some of the world's fastest-growing economies: China, India, and Brazil, for example. And if you choose them wisely (you know, in the Foolish way), you can sleep peacefully at night knowing that you're investing with a manager who -- I'm just guessing here -- probably has greater experience with foreign accounting principles and currency risk than you do.
This same principle applies to industries, sectors, small companies, or even larger firms. And if you're uncomfortable deciphering the often-spotty financials of tiny companies, let someone like Chuck Royce -- head honcho of the fine fund shop that bears his name -- pick your micro caps.
The Foolish bottom line
If you're interested in taking a look at the funds that have made our newsletter's grade -- and outperformed the market by more than 12 percentage points along the way -- I encourage you to snag a risk-free guest pass to Champion Funds by clicking here.
Your pass provides access to the newsletter's back-issue archives, members-only discussion boards, model portfolios, and our complete list of picks -- a collection of funds helmed by managers who have racked up market-beating success by knowing when to buy and when to sell.
Shannon Zimmerman runs point on the Fool's Champion Funds newsletter service, and at the time of publication didn't own any of the securities mentioned above. Dell and Starbucks are Stock Advisor recommendations. Dell is also an Inside Value recommendation. You can check out the Fool's strict disclosure policy by clicking right here.
