No Limits Ladies.com

“Please take a moment to locate the nearest exit, keeping in mind it may be behind you.”
Sound familiar? That is one of the first things those high flying flight attendants chirp before the airplane even moves on the tarmac. Yep, as soon as I enter the plane, the flight attendants tell me how to leave.

That’s how it should be for investing. Before I purchase an investment (any investment, stock, business, or real estate), I have a pretty clear idea when I’m going to exit. It’s called an exit plan and it holds the twin demons fear and greed at bay (like mace for the investment baddies).

I figure out when I’m going to sell and I write it down (gotta keep myself honest). That may be never if I’m investing for dividends or other income. If I’m investing for capital gains however and the company hits one of the benchmarks, no excuses, no delays, I sell.

But if it doesn’t hit one of the benchmarks, I sit on the stock. Stock prices go up. Stock prices go down. If I sold everytime the stock went down a cent, I’d be selling almost every day. If I sold everytime it went up a cent, I’d be doing the same. Often with the same stock.

When I hear that a buddy lost everything on a stock, I know she had no exit plan (unless the exit plan was to sell when the stock price went to zero which isn’t that great of a plan). If my exit plan is that I’d sell if the stock fell 20% then 20% is all I could ever lose on the investment.

When I hear that a stock price increased 500 percent and a buddy is still holding it, I also think that’s a gal with no exit plan (unless the stock still hasn’t hit a key selling point like a major announcement).

Before I buy, I know when I’m getting out.