The S&P/ASX 200 Index (ASX: XJO) has been on a tear in recent months. Since bottoming out on 23 March, the ASX 200 has gained more than 33% and is now sitting firmly above 6,000 points.
With all of this good news, there are bound to be some shares that have been performing better than others. And despite the questionable health of both the Australian and global economies right now, many ASX shares have reached all-time record highs in recent weeks.
Some of the lucky bunch include Fortescue Metals Group Limited (ASX: FMG), Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P), Xero Limited (ASX: XRO) and Kogan.com Ltd (ASX: KGN).
If you've been lucky enough to hold one (or more) of these shares, well firstly congratulations! It's always a cause for celebration when you have a real winner like any one of these top companies.
But I'm sure many investors holding these shares might be a little conflicted about what to do next, given they likely have some (perhaps substantial) profits sitting on the table.
When should you sell a winner ASX share?
Well, that's a very personal question. The first thing to say is that if you have supreme confidence that your company is a true winner and will keep winning for you in the years ahead, there is no reason to sell! Picture someone who bought CSL Limited (ASX: CSL) shares 10 years ago for around $30. If that person sold them when the share price hit $50, just to cash in a quick gain, I'm sure they would be ruing the decision today given CSL shares are currently going for around $282. After all, the great investor Warren Buffett is famous for saying his favourite time to sell shares is 'never'.
But this doesn't apply in all cases, of course. So if you bought into Afterpay, Xero or any other ASX share on a quick bet or a speculative play, it might be time to cash out if you've got some handsome profits on the table. Finding real and consistent winners usually involves a lot of research and dedication. If this isn't your 'jam', then it might be time to recognise you bought a lottery ticket and got lucky.
But even if you did buy a wining share for a long-term investment, after doing your due diligence, there still might be a good cause for a sell. Your company's shares might have become overvalued. You might not be impressed with how the company raised capital during the pandemic, or otherwise be dissatisfied with the direction they are taking the company.
Foolish takeaway
At the end of the day, a sell decision is yours alone and there is no way of knowing whether you made the right call until hindsight comes along. I always ask myself this question before executing a buy or sell order: 'is it me or the person on the other end of the deal who might regret this in 5 years' time?'.
