Learning When To Hold, When To Fold.(THE SMART INVESTOR)(IBD INVESTOR PROFILE)

Byline: DAVID SAITO-CHUNG

If you have a hard time holding on to a good stock for a long while, meet Somabhai Patel. He's held shares of Amgen since 1986.

And smartly so. The stock, up 11,000% from where he bought it, taught him one of the most important lessons in great investing: Buy and hold winners only, not losers.

"I learned to make sure you buy a stock when it is moving up, and to buy in volume," said the retired manager of software systems at a regional bank in California.

On June 5, 1986, Patel took a tip from a broker and planted his first position at 26 a share in the young biotech. That year, Amgen had $31 million in sales and was barely profitable. Patel consulted his son, who has a doctorate in immunology. His thumbs-up gave Patel more confidence in the stock.

He sure needed it. Soon after Patel bought the stock, it dropped hard, going from about 29 to a low of 13.25 in three months. But Amgen recovered. In January 1987, Patel added shares at about 23. This time, it shot out of a good base and rose as high as 44.75 in March that year.

But the stock corrected sharply again in the summer. Then it dived all the way to 16 just days after "Black Monday" on Oct. 19, 1987. From that point, it took nearly two years before Amgen hit a new high.