When do you need to sell?

 

One of the stocks you are holding may need attention.  It may need to be sold. Holding it may cause you to give up all the gains you’ve accumulated while you were holding it. If you aren’t lucky enough to be sitting on a pile of gains, you may be at the brink of a disaster. Why, you ask? Could be a number of reasons… and that’s what today’s article is about. What makes it a good time to sell a stock you believe in? We’ll talk about a few good (and not so good) alerts, and discuss what makes a good alert…

Down 10%?

How about if your stock has gone down suddenly (say 10% in a single day)?

Verdict: No — this is not a good alert because it is way too volatile and does not consistently under-perform the market.

Overvalued?

How about companies that are grossly overvalued, have no earnings, but do have positive estimated earnings?

Lets look at our -99.8% loss another way: year by year…

It went down almost every year, making it a wonderful short screen, but a terrible long one!

Verdict: Heck yes, sell.

Sudden Gain?

How about a sudden gain, with no change in earnings (estimated or announced) or sales (we’re rebalancing daily, as you would get alerts daily.

How about it we break it down by year?

Verdict: If you can’t figure out why the stock went up, sell

What are your favorite reasons to sell?

I’ve shared some of my most/least favorite reasons to sell.

About henry

Henry Crutcher is an avid family guy, board gamer (think Settlers of Catan, Puerto Rico, etc), computer nut, and all around geek. Hailing from Louisville, KY, he has noticed that the weather in Louisville is remarkably similar to the weather in Atlanta, GA despite the 407 miles that separate them. He has two daughters, one cat, and lots of trees. He loves the Miles Vorkosigan series from Lois McMaster Bujold, for its mix of SF, comedy and insight into how people work. He also comsumes more than his fair share of cheesy business/economics books, such as The Ascent of Money by Niall Ferguson, or Farewell to Alms, by Gregory Clark.

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