Financial TipsAlan S. Moore / L’Observateur / April 11, 2000″You got to know when to hold ’em, know when to fold ’em, know when to walk away, and know when to run.”When Kenny Rogers sang these lyrics, he was explaining an old card player’s advice to a younger one. The same advice may be applicable tostock market investing: You have to know when to get out.

Published 12:00 am Tuesday, April 11, 2000

Selling an investment is often regarded as the most difficult decision an investor faces. Purchasing an investment in the first place is much easier.After all, if you fail to buy a certain stock prior to a major surge in price, all you’ve lost is an opportunity to make money. But if you hold a stock andmake the wrong decision concerning when to sell, you can lose real dollars.

Here are some suggestions: Think about selling before you buy. Before you make an investment,you should consider both your motive and your time frame. Let’s say, forexample, you want your $5,000 investment to double in five years. As theyears pass, you can monitor your investment and make your decision to sell based on your original goal. If you reach your goal before five years,you can sell and feel good knowing you achieved your objective. But if fiveyears pass and you’re not even close to your goal, you may have to consider selling or readjust your schedule.

Figure out how much you can afford to lose. Let’s face it, the valueof some investments may go immediately downhill. Some will recover andprosper, but others will not. To avoid the latter situation, you shoulddetermine ahead of time how far you’re willing to go before you’re ready to sell, take your loss, and get out. Depending on your personal situation,you may be able to absorb a loss of 10%, 20%, or more, but the key thing is to establish a stopping point for yourself and then stick to it.

Measure your investment against other similar investments. Evenif your investment is not living up to your expectations, don’t abandon ship without surveying the investment waters. If you can find a better optionsomewhere else, perhaps you should seek that alternative. But if allsimilar investments are performing at about the same level, maybe you should hold on.

Don’t get too greedy. When the value of an investment is going up andup, well beyond your initial goal, it’s hard to let go. You’re tempted tosqueeze every last drop from it. But is that possible? Is it practical? Remember, selling too early is still preferable to selling too late. If youinsist on riding it out, though, at least give yourself a limit on how far down you will let it drop before you sell.

Having a selling strategy is an important aspect of investing. Yourindividual strategy should be based on your particular needs and tolerance for risk.

That’s why we offer our investment management services on a personal basis. We don’t set up general guidelines for everyone and then followthem blindly. Rather, we sit down with each individual investor and mapout a strategy that we both agree is reasonable and appropriate. Then, weconstantly evaluate that strategy in light of the overall market and adjust it accordingly. If that sounds like the investment advice you’ve beenseeking, why not give us a call. We’re one investment you can count on nomatter what else happens.

Alan S. Moore is a Financial Advisor of Legg Mason Wood Walker, Inc., adiversified securities brokerage and financial services firm that is a member of the New York Stock Exchange, Inc.

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