My Dumbest Investment
From D.K., online: My dumbest investment was selling two-thirds of my position in Netflix around a decade ago to cover some college bills. I learned that if you must sell, you should trim your weeds — not the flowers. Don’t sell a stock just because it’s up big: Oftentimes those are the stocks you want to hold — or add to — not trim.
The Fool responds: You’re quite right — it’s smart to sell stocks that have failed you and that you no longer have much confidence in. And adding to your best performers can be good, too, as long as they’re not overvalued. But there’s some gray area there, too.
If you’ve invested in a stock that has grown so much that it now makes up, say, 50% of your portfolio, you’ve got a lot of eggs in that one basket. That’s overly risky. If you need to sell some stocks to free up some cash, it can make sense to trim some oversized holdings. It’s also smart to consider which stocks seem overvalued and which ones seem…
