The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
ROCKVILLE, MD (InvestorPlace) -- While every investor knows it's important to make the right buys, making the right sells is equally important when it comes to protecting your nest egg. In fact, it may even be more important since the climb up is always bigger than the ride down.
Let's say you lose 20% of a $5,000 investment. Now you're at $4,000 -- meaning you'll have to earn 25% to get back to square. Even worse is if you lose 50% to $2,500. Now you'll have to "double" your money just to break even.
Conventional wisdom holds that it's better to stick with a stock that has been beaten down and wait for it to bounce back. But sometimes it's just not worth the wait if your investment only rebounds a few percentage points while the rest of the market moves significantly higher, recording a loss on that position and moving on was the right move for your overall portfolio.To help you pull the trigger and move on to greener pastures, here are seven big name stocks I recommend selling immediately. Of course, each investor has his or her own strategy -- and a one-size fits all approach doesn't always apply. For instance, income investors may not be too concerned that Walmart (WMT) has underperformed if they find value in the 2.7% yield. And of course, swing traders should pay much closer attention to immediate headlines and market trends. Some of these picks may have a few good weeks ahead of them in the short term though I am bearish on all across the next several months. That said, for medium-term to long-term investors -- folks who trade a few stocks a month and strive for long-term capital gains when possible -- you would be wise to take a serious look at these seven holdings and consider selling now. Chipotle Mexican Grill (CMG) : I am a loyal and regular patron of the Chipotle Mexican Grill in the Falls Grove shopping center down the street. But as an investor, I'm simply not buying this stock. Beef prices are rising tremendously, though CMG stock is up 60% since Oct. 1 and has seen little sign of stopping.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV