When to sell

The market got hammered yesterday. Time to look for bargains, those companies that are getting slammed today for no particular reason. Sirius XM (SIRI) is down about 8% and they announced positive earnings. Booyah. Bought some at $1.15. I owned them earlier this year and got out at about $1.00. They kept rising, going above $1.20, but got hit today. I expect them to hit $1.20 again. This brings up the issue of when to sell. As you can tell from some of my returns, I haven't figured that out yet. When I sold Sirius earlier this year, they had doubled in about a month. Then they dipped a little so I jumped out. Hindsight is 20/20, I didn't know if the rise was sustainable so I took the money and ran. Same thing with Vonage (VG) a few months earlier, they announced their global flat fee calling plan, the stock took off and I got a nice bump. In general, I don't have a rule about when to get out. I've read that some investors will sell after a certain return, say 7% and will also sell if the stock drops that same amount. This seems like a good and prudent philosophy, but I don't like to set an random return % and sell. If I feel like a stock has no more upside, I will sell it. My return at that point could be 5%, 20% or 120%. When the upside is gone, so am I. On the downside, I have the same philosophy. I bought American Express (AXP) at about $26/share. They dropped to $13/share and I bought a bunch more. They're now around $46/share. I didn't think they were going belly up and the low price was a buying opportunity.

I also bought Leapfrog Enterprises (LF), they make toys like the Leapad. Been watching them off and on for a year, today they missed the ANALYSTS PREDICTIONS by a few pennies but revenue is up 42% and they got slammed, lost 18% on their stock price. I think they will recover that. No time window, may take a month, may take 6.