I’m Sitting on Huge Gains From Amazon Stock — Should I Sell?


Alison Southwick: The next question comes
from Twitter and it comes from Joe. “Thanks for giving me a hot tip. I had cash in my Roth and
bought 500 shares of Amazon at $185. Now, along with 3,000 of Microsoft at $30
should I diversify or hang tough? I have 13 years to retire.
Aloha! Joe from Hawaii.” Aloha, Joe! Jason Moser: Aloha, indeed, because at those prices,
Joe, you’re sitting on some very nice gains and I… Southwick: I think we need to go see
him in person to answer this question. To really give it the attention it needs.
Moser: And he’d probably fly us all out there. Southwick: Thank you, Joe! We look forward
to receiving our tickets in the mail. Moser: This is a question that everyone
has to answer [individually]. We often talk about buying and selling and
when the best time to sell is. All sorts of reasons to sell. Either your thesis is busted, the company’s
not working out for you, or it’s just been a bad investment. Or perhaps you need
the money for something else. Perhaps you feel like the money
is better allocated somewhere else. Or perhaps, as it could be in Joe’s case,
given what we know based on the information he’s given us, it’s possible that he may be
losing a little sleep at night thinking, “Wow! I’ve got a lot of money, now,
allocated to these two individual companies.” Now, I can’t tell from this e-mail or from
this tweet how much this makes up of his overall investment portfolio, but I’d venture
that it’s somewhat significant. In that case, I’d probably look at maybe
spreading that money around a little bit. Usually when it comes to IRAs —
I realize everyone’s tax situation is unique — you can buy and sell and you’re not going to
have to worry about tax implications there. I feel like with that type of gain, it probably
is worth looking at spreading that money around a little bit, and the reason why I say that
for Joe is because not only is he saying he has 13 years to retire,
but he’s actually saying retire. And I mean a lot of people out there are gunning
for retirement. They have that in their minds. When I think about retirement
it’s a bit more abstract. I’m not necessarily wanting to quit my work
anytime soon, so my investment decisions are a little bit different. But when you’re looking at that it might be
time to start focusing a little bit more on protecting your wealth. Maybe take some money off the table there
and put them into some lower-risk investments. Perhaps some dividend-style
investments because Amazon is clearly a growth story. Microsoft a little bit less so, but it’s a
big tech company, nonetheless. I would definitely look
at spreading that out. Southwick: Ross, you probably
get questions like this a lot. Ross Anderson: I do. I was actually going
to ask Jason what his threshold is. When you see a single position in a portfolio,
where do you start getting uncomfortable? Moser: This is where I would say “do as
I say and not as I do,” because I think I have a much higher risk tolerance than most
people out there, and a part of that is because of the nature of my job. I mean, I’ve had a position at 40% of my portfolio
before, and it didn’t really cause me any concern. Again, I knew what I was doing. Anderson: And you don’t feel
like you’re 13 years from retirement. Moser: I am not 13 years from retirement. I told David Gardner personally that I will
work here until he kicks me out of here. So hopefully that’s never, and while knocking
on 46, here, I think I still have a number of years left to contribute. For a lot
of people, I think 20% is that number. They think, “20% — whoa!
That’s where I’m starting to lose sleep.” I think that number is different for
everyone and it depends on your age, too. If you’re in that stage where you’re growing
your wealth at 20, 30, to 40 years old vs. 50 to 60, maybe you’re focusing on
protecting your wealth. That’s where you have
to make an assessment. Like I said, it’s going to be different for
everyone, but I think given what we know, here, based on the math, that’s a pretty big
position in both of those companies and it’d probably be worth looking at
spreading that risk around a little bit. Anderson: The final thing I’ll say on it is
I would do the math personally and say that if the company lost half its value — if you
chopped it in half — would that change your plans? And if it would, it’s probably
too much risk for you.

Leave a Reply

Your email address will not be published. Required fields are marked *