BHEL has now reached 1700. This is about 50% profits if you’d bought when I first recommended it (2250 pre bonus = 1125 post bonus), and I would recommend that you book 1/4 your profits right away.
For the rest, place a 10% trailing stop loss. Meaning, if the share retreats more than 10% from its high, sell the rest of your stock. That may allow you to buy back later at a lower price.
Note that this is my personal strategy – to sell 1/4th at 50% profits. If you have a different way to work things out that might work better for you. For example some people choose ONLY a trailing stop loss, meaning they never sell unless the stock retreats 10%, which can be great in a big bull run. Some others don’t choose to sell if the fundamentals look good – BHEL has a great set of fundamentals. But the stock’s run up quite a bit and the immediate future may be fully factored into the price – if, from here, you make only 10% gains in the next year, one could argue that the money is better deployed elsewhere.
Where else can money be put? Everything looks high now! There are reasons for the market to stay buoyant, as much as there are for the market to crash. If you can’t find a good opportunity, sit on the cash. There’s nothing wrong with sitting on money; you should invest only when the opportunity is very favourable. A 50% risk is not a risk, it’s a gamble. Let the odds come in your favour, and then invest.
Archives:
- Buy BHEL at 2,250 (Apr 03,2007)
- Update: BHEL at 2,465 (Apr 10, 2007)
- Confirmation of 1:1 bonus (May 2, 2007)
- BHEL spikes to 2,850 (pre-bonus); Ride your profits (May 29, 2007)
