Fresh Look

Rather than fixating on your purchase price, consider what the stock is trading for now. Then ask yourself, Would those shares be worth buying anew at today's price?

To answer that, it's useful to compare a stock's current valuation against that of its peers, says Tom Forester, manager of the Forester Value Fund. If a stock's price/earnings ratio -- or an equivalent measure -- climbs above its sector average, Forester will typically sell. "At that point," he says, "we can find better opportunities elsewhere."

Say you own Starbucks (SBUX, Fortune 500). After a huge rally since March, its shares trade at a steep premium to their peers. Yet lattes aren't nearly the growth story they were a few years ago, when consumers didn't think twice about spending $4 for a cup. And the stock is still down more than 30% from late 2004.

At the very least, make sure the reasons for liking a stock are still there. You may have purchased Citigroup (C, Fortune 500) shares years ago, for example, because of its global dominance and earnings potential. But it's a much smaller bank now, and Uncle Sam owns a third of it. Plus the stock has quadrupled since March, yet it's still off more than 90% from its high.