Ford stock: Take the gain! Take the gain!

— -- A: First, congratulations. It must have taken guts to buy Ford stock..

I'm not sure when you bought it. Shares of Ford got down to $1.26 in November 2008 and dipped again to $1.58 in February this year. Given that the stock's highest price the past 52 weeks is nearly $9 a share, buying it when there seems to be no bottom is difficult.

But if you thought buying a stock at the right time and right price was tough, selling is just as difficult. First, you don't know whether the rally is just the start of something bigger or something that might fade. If you sell too early, you'll kick yourself for missing out on a bigger gain. If you hold on, you might see your gains evaporate.

There are also tax considerations. If you sell a stock you owned a year or less, your gain may be taxed at ordinary income tax rates. If you wait until you own the stock for more than a year, you might qualify for the lower capital gains tax rate. But holding on, just for tax reasons, might prove costly if the stock heads lower.

From your question, it sounds as if you want to lock in your gain. Here, you're acting more like a short-term trader than a long-term investor. And if that's the case, I'll tell you what most traders believe: Many short-term traders sell a stock if it doubles in just a few weeks. You don't want to risk letting a gain like that slip away. Short-term traders also don't worry about tax consequences. To them, it's better to pay taxes than lose money.

If you're asking if Ford is a good long-term hold, that's a question for another day. Come back tomorrow and we'll analyze Ford stock.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns.