| It has generally been observed that most | | | | |
| investors find it easy to make an investment | | | | It is important that you continuously update |
| decision but when it comes to selling they | | | | yourself with the performance of the company |
| find themselves in the dark. You may have | | | | whose shares you have bought. In the |
| purchased the shares after a careful | | | | financial world, too much of a good thing may |
| analysis. Yet if the situation changes, | | | | spell trouble. When you find that the price |
| warranting a review of your decision, you | | | | of a share has gone beyond its true value, |
| should not hesitate to reconsider your | | | | immediately sense there is trouble. The best |
| policy. As an intelligent investor, you | | | | option is always to sell when you find that |
| should know when to sell your stock to book | | | | the share is overvalued, and buy it back when |
| profits or to avoid loss. Selling stock is an | | | | the market forces bring about a correction. |
| integral part of the investment process. Go | | | | Remember selling an overvalued one makes more |
| through the following arguments and then | | | | business sense than buying an overvalued |
| decide whether you wish to retain or sell it. | | | | share. |
| | | | |
| The fear of making a loss | | | | Major changes in the company's management or |
| | | | policy |
| The primary reason why people hold on to | | | | |
| their stock is that they are afraid to make | | | | If there is a major overhaul in the policy or |
| losses. In a market, you make loss only when | | | | the management of the company whose stocks |
| you sell it. Even though the prices may have | | | | you are holding, take it as a signal to sell |
| fallen, you do not actually make a loss till | | | | your stock This is because you bought it |
| you actually sell it. Before selling, | | | | based on its fundamentals and its sound |
| research the market reports to ensure whether | | | | business model. If there is a change on the |
| the fall is temporary, for example, it may be | | | | very basis on which you make your decision, |
| because of the cyclical nature of the | | | | you should sell it. For example, if the |
| company, or due to a one time factor. In such | | | | company has a new CEO, the person may take it |
| scenario, chances are that the stock will | | | | off the direction it is presently pursuing. |
| pick up. On the contrary, if the performance | | | | |
| has gone down due to more permanent reasons, | | | | All said, if the share deserves to be sold, |
| you should sell it. This way even though you | | | | you should not worry about recovering losses, |
| will make a small loss you will be spared | | | | if any. Sell the share, recover the money and |
| from making a bigger one when the prices | | | | invest in another company with a better track |
| actually hit rock bottom. | | | | record and a promising future - for this is |
| | | | what the game of investment is all about. |
| Is the stock overvalued? | | | | |