profit booking

I am not a fan of booking profits in the long-term portfolio when you are not in need of money and business aren't doing as bad as the market. I prefer to hold in the downturn or correction or at times even add more.

 

That approach is good when you aren't sure about the business. However, when you are sure of how the business will grow, one may consider adding more at 15k.

Ask yourself what will Warren Buffett do?

If the company is good, should you be booking out at 50% profit or adding more for 10x or 100x gains?

The 10x and 100x gains don't come when you have too small position and that too if you book out.

So if you take my example of my investment in Divi's Lab. My position is small of only 600 units and the reason it is small is because the correction phase in 2017 was small for the stock. The profit is 3x but have not plans because company is expanding. Even if I book out, I will invest somewhere else and the question I need to ask is which company can grow faster than Divis and if and when I find it, will definitely book out.

Similarly, in Lupin my position is very large because stock under-performed for a long time. I can think about booking partial profits but then I know the company is now doing good things and so I have no plans as of now to either add or reduce.

So the question of booking out partially is only when the company may have tough time ahead and will not perform but not otherwise.