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Selling is much harder than buying if you are long term oriented.
When should you sell? There are 4 main reasons under which selling would make sense
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When should you sell? There are 4 main reasons under which selling would make sense
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1/ You need the cash.
This reasons is personal rather than financial. You may need the cash for any unplanned expenditure.
If this situation becomes recurrent you should take a look at how you are planning your expenditures.
Sell positions in which your conviction is lower.
This reasons is personal rather than financial. You may need the cash for any unplanned expenditure.
If this situation becomes recurrent you should take a look at how you are planning your expenditures.
Sell positions in which your conviction is lower.
2/ You made a mistake analysing the company.
If you made a mistake the best thing you can do is cut losses.
The main obstacle will be your ability to be honest with yourself and to admit your mistakes. Many investors fail to sell because they hope it will break even.
If you made a mistake the best thing you can do is cut losses.
The main obstacle will be your ability to be honest with yourself and to admit your mistakes. Many investors fail to sell because they hope it will break even.
3/ The company’s outlook is different now than when you invested.
You can summarize this point to the following:
Fundamentals have deteriorated
Management has failed to execute
Selling under should be done faster than selling under
You can summarize this point to the following:
Fundamentals have deteriorated Management has failed to executeSelling under
should be done faster than selling under
4/ Opportunity cost.
If you find a better investment opportunity it may make sense to sell and invest the proceeds in it.
Be careful as you will probably overweight the favorable characteristics of your new investment and you will increase the probability of making a mistake.
If you find a better investment opportunity it may make sense to sell and invest the proceeds in it.
Be careful as you will probably overweight the favorable characteristics of your new investment and you will increase the probability of making a mistake.
All of the reasons mentioned above (except the first one) come from the fact that you have made some kind of mistake.
If you are long term oriented and you have done your analysis correctly then it is obvious that you SHOULD NEVER SELL.
If you are long term oriented and you have done your analysis correctly then it is obvious that you SHOULD NEVER SELL.
