Cisco Systems (CSCO), Amazon (AMZN), and When to Sell a Stock

Knowing "when to hold 'em" and "when to fold 'em" is not easy for investors. Just ask Peter Lynch.

In my 10X Innovation Summit, I address most of the practicalities of buying stocks with 10X profit potential. The topic I would like to explore now is what happens AFTER you buy. In other words: when to sell a stock, if you want the maximum profit from your investing ideas.

Let me show you how by example.

Since 10X gains are usually derived from huge, world-changing megatrends, we’ll look back at one of the biggest in recent memory: the rise of the internet.

Imagine it’s the early 1990s, when the internet was first being introduced. The more you learn about it, the more possibilities you discover.

You start to see how one day we’ll be doing just about EVERYTHING online — work, shopping, socializing, education…you name it. And you become eager to invest in this phenomenon.

As one of the few to understand the Internet Revolution in its very early days, you would know the select few stocks to buy.

You’d buy some Cisco Systems (NASDAQ:CSCO), which supplied the actual gear these networks run on — basically, the “plumbing” of the internet.

You’d buy some Microsoft (NASDAQ:MSFT) stock, too. After all, in the 1990s, no one gets on the World Wide Web without their personal computers (PCs). Maybe you’d also pick up shares of another PC manufacturer: Dell Computer (NYSE:DELL).

Within a few years, you’d have joined the ranks of the “dot-com millionaires.”

$1,000 in CSCO stock would be worth $1,264,000 after less than 10 years! With MSFT stock and DELL stock in the mix, too, you’d end up with several million dollars.

But there’s just one catch: None of these stocks went straight up. In fact, no stock does — especially in its early stages.

Here’s how CSCO stock would have looked a year into your investment:

Cisco Systems (CSCO), Amazon (AMZN), and When to Sell a Stock

Not many people would have stuck around after that sheer drop in March 1991 — when several months of gains were erased in days.

But then, not many people would have enjoyed the meteoric rise CSCO then saw over the next four years:

Cisco Systems (CSCO), Amazon (AMZN), and When to Sell a Stock

As you see, that initial drop ended up just being a blip. (It wasn’t even the sharpest correction CSCO stock ended up making, on its way to glory.) But no one knew that at the time!

No one but you. Because you knew exactly WHY you were investing in CSCO. Namely, to cash in on the Internet Revolution. And that was just getting started. Therefore, you knew CSCO stock was just getting started, too, as a money-making investment.

So, if you’d cashed in after one year, you’d have made a modest profit on CSCO stock.

But if you’d cashed in a few years later – once the internet was becoming more fully adopted in businesses and households – that’s how you’d have turned $1,000 into $1,264,000.

The biggest winners tend to work just like that. Another example I give in the 10X Innovation Summit of when to sell a stock (and when NOT to) was Amazon (NASDAQ:AMZN).

Believe it or not, AMZN is sitting on a 2,700% gain! (I bet you can believe it, since Amazon has just about taken over the whole world, at this point.) But like CSCO, no one just woke up one morning to 2,700% profits on AMZN. It took 10 years.

Sure, AMZN stock had plenty of good years, on the way to that 2,700% gain — but it had bad years along the way, too.

Cisco Systems (CSCO), Amazon (AMZN), and When to Sell a Stock

Here’s me during my 10X Innovation Summit presentation, showing the last 10 years of AMZN’s returns. As you see above, if you invested in AMZN, you had to take the good with the bad. And you had to have faith that, in the end, you’d come out 10X ahead. (In this case, you’d have made much more than that!)

But letting your investment ride can be one of the hardest things to do.

Just ask Peter Lynch, a legend on Wall Street who once managed Fidelity’s mammoth mutual fund Magellan.

One of Lynch’s most famous quotes had to do with what he regretted most in his career: “I always sold stocks way too early.”

I’m sure you can relate. I certainly can.

I felt the same way about my investment in Intuitive Surgical (NASDAQ:ISRG) stock.

When to Sell a Stock: My “Peter Lynch Moment”

Intuitive Surgical was one of the first stocks I bought for clients, back in 2004. It wasn’t widely known, but the company was a pioneer in the brand-new field of surgical robotics. So, it fit a major theme for me: next-generation healthcare. We bought around $15 per share – and within a few weeks, it was at $20!

I went ahead and sold ISRG, and we took that profit to the bank. And you know what? My clients were happy with that. It was a 30%+ return in a short time. But guess what? ISRG stock is up to $525 today. (And that’s even after a 3-for-1 stock split.)

Intuitive Surgical (ISRG) Stock Chart: When to Sell a Stock

I wished I’d been less focused on possibly losing the gains we had…and more focused on why ISRG was a good investment, long-term. If I had – if we’d held on through the financial crisis, the Obamacare controversy, and everything else – we’d now have a 10,400% profit!

But I know better now. And I make sure my readers know better, too.

If you’d bought AMZN on my recommendation — and held on — you’d have made 1,498% in the end!

You’d have made 1,024% on Ross Stores (NASDAQ:ROST) the same way, plus 1,407% on Boston Beer Company (NYSE:SAM), 1,495% on Advanced Micro Devices (NASDAQ:AMD) and 2,040% on Ulta Beauty (NASDAQ:ULTA)!

I say this not to brag, although I definitely am proud of these results. But I just want to show you that 10X gains really are possible.

Here’s how: A smart investor does not worry about “picking stocks.” They worry about picking trends! And once you get to know that trend inside and out — the major players, and the smaller imitators who are just hanging on for the ride — the right stocks reveal themselves. Then you know when to sell a stock…only once your idea has fully played out.

Go ahead and check out the replay of my 10X Innovation Summit for an actionable look at the hottest trends now. I even give away my most recent stock pick for FREE.

Matthew McCall is the founder and president of Penn Financial Group, an investment advisory firm, as well as the editor of Investment Opportunities and Early Stage Investor. He has dedicated his career to getting investors into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA), +1,044% in Tesla (TSLA), +611% in Liquefied Natural Gas Limited (LNGLY), +324% in Bitcoin Services (BTSC), just to name a few. If you’re interested in making triple-digit gains from the world’s biggest investment trends BEFORE anyone else, click here to learn more about Matt McCall and his investments strategy today.


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