Few investing situations feel better — or more stressful — than owning a stock that has doubled or tripled.
On paper, it looks like a clear win.
Your capital has worked hard.
Your patience has paid off.
Yet instead of calm confidence, many investors feel a creeping sense of unease.
Friends tell you to “lock it in,” headlines warn that markets are overheated, and the fear of giving back gains quietly takes centre stage.
But selling just because a stock has gone up can be as dangerous as holding blindly.
Let us break down when taking profits can be the right call — and when holding could lead to even better long-term returns.
Why Big Gains Trigger the Urge to Sell
The urge to sell a big winner rarely comes from spreadsheets, but psychology.
Loss aversion is the biggest driver.
Once gains are visible, investors become more focused on protecting them than on maximising long-term returns.
The pain of watching a paper gain shrink feels sharper than the joy of further upside.
Anchoring also plays a role.
Recent highs become mental reference points, such that any pullback feels like failure, even if the stock is still well above the original purchase price.
Then there is the desire for emotional closure.
Selling provides relief, creating a neat ending to the story: “At least I made money.”
Together, these forces explain why psychology, and not logic, drives many profit-taking decisions.
The Case for Taking Profits
There are situations where taking profits is often justified, but they tend to be grounded in fundamentals rather than feelings.
One, when valuation becomes stretched, and the share price is running well ahead of what the business can reasonably support.
At this point, future returns may be pulled forward, and the margin for error narrows meaningfully.
Another reason to trim a position is portfolio concentration.
A stock that has doubled or tripled can quietly come to dominate overall portfolio exposure.
Even top-tier Singapore blue chips like DBS Group Holdings (SGX: D05) can throw your portfolio off balance.
This is especially after it has had a strong run paired with an S$8 billion capital return programme over three years.
Sometimes, a reasonable move to take profits is because the fundamentals have changed.
Maybe growth has slowed, the company’s edge isn’t as sharp, or the industry itself is shifting.
And let’s not forget: better opportunities could pop up elsewhere.
If a stock’s future looks capped and other options offer stronger fundamentals or better value, moving your money would not just be a logical decision; it’s a disciplined one.
The Case for Holding On
Taking profits can seem wise, but staying invested is sometimes more important, especially after a stock has already climbed significantly.
Compounding favours big winners.
Over the long term, a few stocks typically account for most of your returns.
Selling too early can mean missing out on years of compounding, sometimes just because a rally felt overheated or uncomfortable.
Dividends matter as well.
Selling means you lose future income, which can accumulate meaningfully over time.
Investors who hold dividend stocks like CapitaLand Integrated Commercial Trust (SGX: C38U) continue to receive payouts, supported by its 97.2% portfolio occupancy, even when prices fluctuate.
There’s also reinvestment risk, which often gets overlooked.
It isn’t easy to find a new investment of comparable quality.
Many investors sell excellent companies and end up chasing riskier or lower-quality options in hopes of finding the next winner, while the original stock quietly keeps growing.
Real growth that is based on earnings, solid balance sheets, disciplined leadership, only develops over years, not just a few quarters.
Prices won’t rise in a perfect, straight path, but companies that consistently perform tend to reward patient shareholders, long after the first surge.
Questions to Ask Before You Sell
Before making any decision, it helps to pause and ask a few grounding questions.
- Would I buy this stock again at today’s price?
- Are earnings and cash flow still growing?
- Is the balance sheet still strong?
- Has the company’s competitive position improved or weakened?
- Does this position still fit my time horizon and risk tolerance?
If the answers remain broadly positive, selling purely because of past price performance may not be justified.
Smarter Alternatives to “Selling Everything”
Sometimes it just makes sense to sell part of your position, lock in some gains, and let the rest ride.
That way, you manage your risk but still stay in the game.
Investors can also take the opportunity to rebalance their portfolios by tweaking the allocation when it feels right, or to hang on to the stock and deploy dividends elsewhere.
Even if your core holdings barely shift, your portfolio keeps evolving.
Stay invested while keeping an eye on the company’s fundamentals, and only reconsider if something big changes in the business.
Get Smart: Letting Fundamentals Lead, Not Fear
A stock doubling or tripling is not a problem — it’s often a sign of owning a great business.
Many investors make the mistake of selling just because a stock appears expensive at first glance, without checking if the fundamentals justify the price.
Others try to time the absolute peak – a challenge even seasoned professionals rarely get right.
Still others, after selling, jump into riskier or lower-quality stocks, hoping for another big payoff.
That kind of impatience can undo all the progress you’ve made.
Make decisions based on valuation, the company’s fundamentals, and how your portfolio fits together.
Don’t let emotions push you around.
For long-term investors, knowing when to hold on is just as important as knowing when to let go.
Many Singapore stocks fall behind inflation, which means your money quietly loses strength over time. Dividend stocks have a very different track record. Some continued delivering 6% to 13% every year across the toughest market conditions.
In this FREE report, discover 5 crisis-tested dividend stocks that kept rewarding investors while the market struggled. Download your dividend investing guide now.
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Disclosure: Joseph G. does not own shares in any of the companies mentioned.
