| The theory behind selling stocks is | | | | is the English 'Sell in May and go away; |
| pretty simple; the hard part, as always, | | | | don't buy back 'til St Leger day'. The |
| is putting it into practice. | | | | St Leger Stakes is the last English |
| The question of when to sell a stock is | | | | 'classic' horse race of the flat season |
| one of the most talked about areas of | | | | and is held in early September. The |
| investing. It's also one of the most | | | | theory goes that you should skip the |
| vexing. And it's no accident that these | | | | summer months in the stockmarket (at |
| two things appear together. There are | | | | least in London) because prices will |
| scores of little stockmarket tips thrown | | | | just drift lower as the 'City' |
| around on when to sell, but if you | | | | professionals bunk off to enjoy |
| followed most, or even a few, of them, | | | | Wimbledon, Ascot, Henley and all the |
| you'd soon get yourself tied up in | | | | rest of it. But if everyone did sell in |
| knots. | | | | May, then you'd need to be selling in |
| 'You'll never go broke taking a profit', | | | | April, and perhaps March and so on. And |
| it is often said, and at first it seems | | | | ditto for buying back in September (or |
| like sensible advice. But you won't get | | | | August ... or July ... ). |
| far in the stockmarket if you sell all | | | | Means to an end |
| your stocks the moment they pass your | | | | The truth is that you should make your |
| buy price (and you eventually will end | | | | sell decisions according to basic |
| up broke from all the trading costs). | | | | investing principles. The trick is to |
| Another tip is to 'Buy the rumour; sell | | | | remember that profits in the stockmarket |
| the fact', meaning that you should buy | | | | come from holding undervalued |
| stocks when good news is rumoured and | | | | investments and that buying and selling |
| sell when it actually appears. The idea | | | | are simply means to that end. Of course, |
| is that people tend to overreact to | | | | as we discuss in this issue's cover |
| rumours, pushing a stock beyond what's | | | | story, you also need to combine the |
| actually justified by the news. This may | | | | right blend of undervalued investments |
| be true, but it is of course fuelled by | | | | so you're not too exposed to any |
| people 'buying the rumour'. | | | | particular economic shocks. |
| Perhaps the most curious advice of all | | | | |