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Or hold on for the ride?

 

I'm talking of cases where a long term pick sees a sudden boost and breaks the "magic" +5.00 mark (score needed to count towards accuracy as an ended pick) in a short time frame.

 

On the one hand, this is clearly a good thing. Points, accuracy, hooray!

 

On the other hand, it does present a small dilema. I try to look at the reason for the stock increase. Has wall street finally caught on to the fair value? Or was there a reason (increase in earnings estimates) that would "raise the baseline"? OR, is it just a random noise fluctuation?

 

In the 3rd case it's pretty clear the best option is sell and wait for it to fall back down to re-enter. This does run the risk of not happening, if the stock decides it's happy at it's new level.

 

But if it's a raised baseline, you really want to let it ride. The pick is still a good pick, it's just a better pick than originally expected.

 

The first case is arguably the trickiest. Basically it means that the market has caught on to the value you saw in the stock, just sooner than expected. For CAPS, I've both ended my pick and let it ride in different situations. From experience, it usually flatlines after a big jump, but not always.

 

Overall, I think ending the big short term jumper stocks is the right play, but there are cases it's good to hand on for the ride.

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