The second principle of investment wisdom is to buy low (cheap) and sell high (expensive). This is similar to the major principle of weight control, which is to eat less and exercise more. Both of these principles are difficult to apply, given human behavioral tendencies.
Yes - it's obvious. If you sell a holding for more that you paid for it, you make money.
But - you must evaluate your holdings, especially funds, to see if the particular investment that you hold is still a good representative of its asset class for your portfolio. Sometimes, fund managers make serious goofs (they are human just like the rest of us) that damage their performance (and your results). If, after sufficient research, you believe that you could do better with a different international large company fund, there is no harm in selling the "B" fund and buying the "A" fund, even if your "B" fund has hit a low. This is somewhat similar to a football team replacing a player. You have the same team but a new individual in the same position. Morningstar (http://www.morningstar.com/) is a good research tool for ferreting out the best funds. By "best" funds, I mean the funds that are good representatives of their asset class, not the hot performers. I am NOT recommending that you constantly replace funds because they've slipped from five stars to three stars. Read the analyst's comments before you decide that the fund simply doesn't have a place in your portfolio any more.
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