Knowing When to Sell Your Stock: Some Quick Tips

1. Knowing When to Sell Your Stock: Some Quick Tips

2. Conclusion • Determining what stocks to buy and at what juncture of its performance is certainly an important decision. However, deciding when to sell one’s stocks holds just as much significance in ensuring that the stockholder is subjected to the least losses in the situation. Some market research and analysis, as well as a thorough consideration of one’s requirements and the stock’s current and expected performance can help an investor make the right trading decision. Reputed stock brokers and investment advisors can actively assist and guide their clients in navigating through the nittygritties of trading. Click here to know more about the investment services we provide!

3. Introduction • Having extensive knowledge about investment and trading is certainly essential, but it is not the exhaustive attribute to ensure trading success. Besides the technical knowhow of trading, a trader also masters the skills of keen observation and tactic, as well as the ability to know when to strike or hold on. That’s why many investment experts and share market brokers believe that experience into trading holds just as much significance as does one’s knowledge about the field. • Having said that, many investors and traders are often in a dilemma as to when exactly it is a good time to sell the stocks that they may be holding on to. When is it a good idea to let go, and when is it advisable to hold on? The following tips may help you gain more clarity:

4. When the Company’s Core Values and Objectives Undergo a Shift A company’s prospectus is probably the most essential document you may want to read through and thoroughly reflect upon while deciding on what stocks to buy. It is often a company’s core values and objectives that drive investors to buy its shares. However, whether it is the stock market world or corporate sector, change is the only constant. Corporate firms are also subject to major shifts and transformations as a result of a change in internal processes, management teams, acquisitions and so on. However, regardless of the reason for this change, it is always better to sell a stock when you feel that the core values, based on which you probably decided to invest in the company, no longer resonate with your personal ideologies. It is no good owning a share in the company whose ideals you do not believe in.

5. These are two extreme situations when you might need to sell your stock instead of holding on to it. The first one is when your stock is overvalued, or when the price of a company’s stock becomes disproportionately greater than its earnings and/or P/E ratio. According to Investopedia, the P/E ratio provides key information about whether a stock is undervalued or overvalued. • Overvalued stocks are usually expected to experience a price decline in the long run; as a result, the stockholder may earn a much higher profit by selling off the stock immediately as opposed to holding on to it. On the other hand, another aspect to consider while trading on equity is that holding on to consistently underperforming stocks may also lead to a further decline in its price as time passes by. Thus, it’s better to sell off a grossly underperforming stock at once to prevent further losses.

6. When There are Better Opportunities in the Stock Market. • While one may sometimes find it disconcerting to give up on existing stocks and purchase new ones, it is also important to shed our comfort zones and always be open to new and more lucrative opportunities. The stock market is always fluid in nature; it witnesses a continuous inflow and outflow of equities as more and more companies offer their shares to the public. If you as an investor have conducted a thorough equity fundamental analysis and have reason to believe that a particular stock may be a more profitable venture in the long run, it makes sense to sell your existing stock to make way for this new one.