Imagine this: you buy a stock and within two days, you’re sitting on a 10% gain.
How would you feel?
Thrilled, I bet.
Maybe even a little smug.
Now, here’s the harder question: what would you do next?
If you’re tempted to sell and lock in that profit, you’re not alone.
In fact, I’d argue that this moment — not a crash, not a bear market — could be the most dangerous moment in investing.
Let me explain.
The Day a CEO rang the bell
Over 20 years ago, one of the first stocks I bought soared by 10% in a single day.
Anxious to know what happened, I scoured the internet for any news I might have missed.
Surely, there must be a great reason why a stock rose by so much in such a short time.
There must be some positive news.
But alas, the only reason I could find was that the CEO of the company rang the opening bell on the NASDAQ that day.
That was all there was to it.
I was new to investing back then, but it occurred to me that I shouldn’t be betting on the CEO ringing the opening bell for a stock to gain.
It just didn’t make any sense.
My point is this: stocks can move up or down in the short term for reasons that do not hold up under scrutiny.
A 10% gain in two days sounds wonderful.
But it tells you almost nothing about whether the business behind the stock is worth owning for the next five years.
The trap of the quick win
Here’s what makes a quick gain so treacherous.
You start to feel smart.
Daniel Kahneman, one of the fathers of behavioural finance, describes this as System 1 thinking — our reflexive, intuitive brain that processes information on autopilot.
System 1 loves patterns.
And when a stock goes up shortly after you buy it, System 1 draws a simple conclusion: you made a great decision.
The problem?
System 1 doesn’t distinguish between a great decision and dumb luck.
Michael Mauboussin, the author of More Than You Know, drives this point home with a simple framework.
A good outcome can come from a good process (deserved success) or a bad process (dumb luck).
Likewise, a bad outcome can come from a good process (bad break) or a bad process (poetic justice).
A 10% gain in two days?
That’s almost certainly luck, not process.
And if you sell based on luck, you’ve just abandoned your process for a dopamine hit.
The overnight disappearing act
Here’s the other side of the coin that nobody talks about.
That 10% gain?
It can vanish overnight just as quickly as it appeared.
Stocks that are driven up by short-term enthusiasm — a favourable headline, a one-off catalyst, or even a CEO ringing a bell — are just as easily driven back down when the excitement fades.
If you didn’t sell, you’re right back where you started.
Or worse, you’re in the red.
This reality cuts both ways.
It means the quick gain was never truly “yours” to begin with.
And it means that if you’re investing for the long term, a two-day price movement should carry almost no weight in your decision-making.
The question is never “should I sell my 10% gain?”
The question is “do I believe this business will be worth significantly more in five years?”
If the answer is yes, then the 10% is noise.
The best reason to sell
Now, I’m not saying you should never sell a stock.
But I am saying the reason should have nothing to do with a two-day price movement.
In my book, the best reasons to sell are simple: you need the money, or the gains are enough to satisfy your financial needs.
Notice what’s absent from that list?
“The stock went up 10 per cent.”
Selling because a stock rose quickly is a market-timing decision dressed up as discipline.
It feels prudent.
But it’s just another way of letting short-term noise dictate your long-term strategy.
Get Smart: The real test of discipline
Here’s the irony that most investors miss.
We spend so much time preparing for crashes, bear markets, and recessions.
We read books on managing fear.
We practice holding through downturns.
But almost nobody prepares for the opposite: the quick gain that tempts you to walk away from a winning position.
The next time a stock hands you a fast profit, resist the urge to act.
Instead, ask yourself: has anything changed about why I bought this business?
If the answer is no, then the gain is simply the market agreeing with you — for now.
Your job isn’t to take the compliment and leave.
Your job is to let the business do what you bought it to do.
The most dangerous moment in investing isn’t when you’re losing money.
It’s when you’re making it too quickly.
Markets are volatile again. Oil prices are rising, and tech stocks are swinging.
From my perspective, the question isn’t what happens next—it’s how you position yourself to respond.
In this webinar, Joanna and I will walk through a clear, three-layer framework we use to navigate uncertainty with discipline and clarity.
If you’re looking for a more structured way to think and act in markets like these, join us here.
Tired of articles that just say “do your own research”? Get Smart, our weekly investing newsletter shows you how. You’ll learn simple ways to size up a stock, like what signs to look for and how to know if it’s worth your money. These are tools our team uses, and you can use them too. Sign up here for free and start investing with more confidence.
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Disclosure: Chin Hui Leong does not own any of the shares mentioned.
