Diversification or "Diworsification"?
In this edition of The Motley Fool's "Ask a Fool" series, Motley Fool analysts Jason Moser and Brendan Mathews take a question from a reader who writes:
I have a double on two companies that I believe have growth ahead of them. I am considering two other companies that could also grow as well. If I take the gains from the two that I own and buy the two companies I am considering, it would diversify the portfolio further. Is this FOOLISH?
Jason and Brendan agree that selling is often the most difficult thing to do. There are many reasons to sell: a broken investment thesis, a fulfilled investment thesis, or even a better place to put one's money. Jason says it can make perfect sense in some situations for an investor to harvest some gains from a successful investment in order to put the money to work in a better idea. As always, though, investors need to remember that some situations might carry tax implications in selling, which is something to keep in mind.
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